Advancing environmental sustainability: The dynamic relationship between renewable energy, institutional quality, and ecological footprint in the N‐11 countries

Abstract

AbstractThe goal of simultaneously increasing economic development while mitigating ecological disbenefits is a significant challenge for many countries. There is a growing recognition that greater attention must be given to environmental concerns to maintain and improve biodiversity and generate positive ecological outcomes as part of measures to meet the United Nations' Sustainable Development Goals (SDGs). Many countries have increased their reliance on renewable energy to reduce carbon emissions and overall ecological footprint, but it is argued that any positive relationship between economic growth and pro‐environmental outcomes relies heavily on the quality of a country's institutions. This paper investigates this contention, focusing on the so‐called Next 11 (N‐11) countries, that is those developing countries exhibiting the most rapid economic development in the last three decades. Using the cross‐sectionally augmented autoregressive distributed lags (CS‐ARDL) technique to address cross‐sectional dependence in panel data, this paper examines the effects of renewable energy and institutional quality on the ecological footprint of the N‐11 countries from 1990 to 2022. It shows that while economic growth frequently generates environmental degradation, increasing consumption of renewable energy reduces the ecological footprint provided that institutional quality contributes positively to pro‐environmental outcomes. This analysis highlights the important role of institutional quality when designing policies to promote environmental sustainability. The results provide a benchmark for policymakers in the N‐11 countries to increase investment in renewable energy resources to help deliver environmental sustainability goals while also emphasising the need for governments to develop improved institutional quality.