From Resource Dependence to Sustainable Development: The Role of Institutions and Technology in Reducing CO2 Emissions in GCC Countries
Abstract
Extending the stochastic STIRPAT framework, this study investigates the impacts of institutional quality, technological progress, and natural resource dependency on CO2 emissions across the Gulf Cooperation Council (GCC) from 1995 to 2021. Econometrically, the framework integrates a multi-estimator matrix comprising FMOLS, PCSE, and Panel GMM techniques to control for endogeneity, parameter heterogeneity, and cross-sectional dependence. The empirical parameters reveal that institutional quality and renewable energy consumption exert a highly robust, universally consistent carbon-mitigating effect across all models (FMOLS: −0.2997; PCSE: −0.3044). Conversely, economic growth, non-renewable energy utilization, and urbanization act as the primary structural drivers of degradation. Crucially, the effects of technological innovation and resource dependence are model-dependent; they show statistical significance strictly within long-run FMOLS parameters (−0.0287 and +0.1339, respectively) but turn insignificant under cross-sectional corrections (PCSE/GMM), highlighting that resource wealth is highly conditional. Furthermore, the analysis uncovers a unique demographic paradox in the GCC, where transient foreign labor inflows cause aggregate population growth to exhibit a stable carbon-mitigating response (−0.0207). Policy implications demonstrate that unilateral interventions are insufficient due to cross-sectional dependencies. Instead, mitigating emissions demands an inter-country correlated framework through mechanisms like the Gulf Cooperation Council Interconnection Authority (GCCIA). Finally, the study bridges the macroeconomic–engineering nexus, arguing that regional innovation must transition toward active carbon utilization clusters, specifically electro-, thermo-, and photocatalytic CO2 conversion systems using porous crystalline metal–organic frameworks (MOFs) to support the 2030 Sustainable Development Goals (SDGs 7, 12, and 13).