Testing the Effects of Economic Growth and Institutional Quality on Environmental Sustainability: New Insights from ARDL and MMQR Approaches

This study assesses how economic growth and institutional quality influence carbon emissions in Gulf Cooperation Council (GCC) countries between 2003 and 2022. The results of dynamic Autoregressive Distributed Lag (ARDL) and Method of Moments Quantile Regression (MMQR) models reveal a U-shaped relationship between CO 2 emissions and economic growth in both the short and long run. Institutional quality, measured by control of corruption and government effectiveness, reduces emissions in the long run but has a contrary effect in the short term. Surprisingly, the interaction terms are positively associated with emissions in the long run, challenging the Environmental Kuznets Curve hypothesis in the GCC context. These outcomes suggest that economic growth could drive emissions reduction independently of institutional strength. The findings, validated by MMQR, underscore the need for institutional reforms and digital transformation to align environmental and economic objectives in the region.