Institutional Quality and Industrial Employment: Key Drivers of Sustainability

Abstract

Sustainable growth is the foremost objective of any country. Growth if not sustainable, is only a broken dream of growth. This study investigates the factors influencing environmental degradation, which is the most important pillar of sustainable growth, using a panel dataset of 167 countries over the span of 2000 to 2022. By using the two-step system GMM, our findings show a strong positive relationship between lagged CO₂ emissions and current emissions, suggesting a persistence effect. By the given results, enhancing institutional quality reduces environmental degradation. While GDP exhibits a slight negative relationship, indicating economic growth may reduce emissions, foreign direct investment does not show a significant impact. The study emphasizes the importance of institutional quality in mitigating environmental degradation, providing insights for policymakers to design effective strategies like the implementation of strict energy efficiency standards and provide incentives for industries to adopt green technologies/finance. Strengthen environmental regulations and enforce penalties for noncompliance to reduce industrial pollution and promote sustainable practices.