Environmental Quality, Economic Growth and Role of Institutional Quality: Panel Data Analysis from Selected Asian Countries

This study investigates not only how economic growth and institutional quality affect environmental quality but also the validity of the Environmental Kuznets Curve in selected Asian developing countries from 2002 to 2018. The panel unit root tests were applied, and the results revealed that the variables were not stationary at level but became stationary at the first difference, meaning that the variables are integrated in order 1. The Pedroni cointegration test confirms the cointegration between the variables, indicating that a long-run relationship exists between them. To examine the long-run relationship between variables, the panel FMOLS method has been used. The findings indicate that the Environmental Kuznets Curve hypothesis is present in the panel under consideration. Additionally, CO2 emissions and economic growth are positively related, and institutional quality reduces environmental degradation, while other control variables, namely population growth, trade openness, and energy consumption, have a positive influence on environmental degradation.