How Green Growth, Institutional Quality and Globalization Impact Environmental Sustainability in the selected OBOR Economies: The Role of Energy Efficiency

The quality of the environment is gradually declining dramatically due to mankind's activity, resulting in a threat to the sustainability of our ecosystem. However, this study investigated the problem by considering effective indicators such as green growth, institutional quality, globalization, and energy efficiency. Therefore, this study explores the nexus between green growth (GG), institutional quality (IQ), and globalization (Glb) with environmental sustainability (CO2). The study also includes Industrialization (Ind) and Trade Openness (ToP) as control variables. Moreover, the study contributes to the literature by predicting the net moderating potential effect of energy efficiency (EE) improvements on environmental sustainability. The study employs the 18-year data for the period 2005 to 2022 from 96 selected OBOR countries. The data sorting accounted for cross-sectional dependence (CSD), the Breusch-Pagan LM, Pesaran scaled LM, and Pesaran CD, 2007 tests were used and similarly for Slope Coefficient Heterogeneity (SCH), Pesaran, Yagmata. 2008 tests were used. The second generation method, Pescaran tests namely CIPS and CADF were used to check the stationarity of the data. This study employed the PMG-ARDL model for the data analysis. MG, AMG, and DFE estimates were also performed to check the robustness of the results of the model that unveil the long-run as well as short-run relationships. The long-run results revealed that GG, IQ, Ind, and ToP have a positive and significant relationship with CO2 whereas IQ has an inverse relationship. Similarly, in the short run GG, and Ind are positively significant with CO2. The moderation effect observed on GG and CO2 nexus is insignificant whereas the moderation effect on IQ and Glb has been seen as significant with CO2 nexuses. The finding indicates that when setting sustainable goals, it must review the determinants of CO2 emission specifically for OBOR economies, as environmental sustainability is more challenging than reducing pollution.