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<p>Economic freedom, strictness of environmental policies, foreign direct investments and institutional quality can positively or negatively affect the ecological footprint. The relationship between economic freedom and ecological quality depends on factors such as policies implemented, legal regulations, and environmental awareness. Strict implementation of laws and regulations to protect the environment indicates the strictness of ecological policy. This study examines the impact of economic freedom, environmental policy stringency, foreign direct investment and institutional quality on ecological footprint in BRICS countries between 1995 and 2020. The study investigates this objective by employing panel long-run estimators that account for cross-sectional dependence. Specifically, the Common Correlated Effects (CCE) and Regularized Common Correlated Effects (RCCE) methods were utilized to ensure robust estimation results. According to the robust results of panel long-run estimators, direct foreign investments increases environmental pollution in Brazil, economic freedom increases environmental pollution in South Africa, and institutional quality increases environmental pollution in India. Environmental policy stringency decreases environmental pollution in the panel and China. Policy interventions are necessary to improve ecological quality. In this context, it is essential to invest in sustainable development policies for institutions to improve environmental quality through strict environmental policies without abusing economic freedom.</p>

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Solving the ecological puzzle: how foreign investments, economic freedom, environmental policies stringent, and institutional quality shape footprint

  • 期刊论文

  • 出版模式：

    开放获取

  • 发表日期：

    2026年7月14日

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  • Yasin Sogut,
  • Nazli Demirtas,
  • Mehmet Aydin,
  • Tunahan Degirmenci,
  • Yunus Emre Turan

摘要

Economic freedom, strictness of environmental policies, foreign direct investments and institutional quality can positively or negatively affect the ecological footprint. The relationship between economic freedom and ecological quality depends on factors such as policies implemented, legal regulations, and environmental awareness. Strict implementation of laws and regulations to protect the environment indicates the strictness of ecological policy. This study examines the impact of economic freedom, environmental policy stringency, foreign direct investment and institutional quality on ecological footprint in BRICS countries between 1995 and 2020. The study investigates this objective by employing panel long-run estimators that account for cross-sectional dependence. Specifically, the Common Correlated Effects (CCE) and Regularized Common Correlated Effects (RCCE) methods were utilized to ensure robust estimation results. According to the robust results of panel long-run estimators, direct foreign investments increases environmental pollution in Brazil, economic freedom increases environmental pollution in South Africa, and institutional quality increases environmental pollution in India. Environmental policy stringency decreases environmental pollution in the panel and China. Policy interventions are necessary to improve ecological quality. In this context, it is essential to invest in sustainable development policies for institutions to improve environmental quality through strict environmental policies without abusing economic freedom.