Environmental performance of countries. Examining the effect of diverse institutional factors in a metafrontier approach

This study employs an innovative metafrontier methodology, inspired by Huang et al. (2014) [10], to investigate the combined impact of economic policy uncertainty, political orientation, and institutional quality on the environmental performance of 136 emergent and non-emerging countries from 1990 to 2018. Using such a parametric approach, the research evaluates countries’ efficiency both within specific geographical contexts and on an individual basis. The empirical findings reveal that North America and the Middle East & North Africa are more efficient at implementing environmental pollution-reduction technology. Furthermore, in a metafrontier scenario, economic policy uncertainty, institutional quality, and political orientation significantly affect regional environmental inefficiencies. Notably, economic policy uncertainty reduces environmental inefficiency in South Asia but improves it elsewhere, while better institutions are associated with reduced CO₂ emissions and enhanced efficiency. Additionally, a left-leaning approach demonstrates a positive impact on reducing environmental inefficiencies in South Asia and Latin America & Caribbean. By shedding light on the intricate interplay between economic policies, environmental outcomes, and global disparities, this study advances our understanding and poses key research inquiries while offering potential policy implications.