Financial integration, trade openness, and CO2 emissions in BRI-MENA economies: nonlinear effects of renewable energy transition and governance quality

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🔬研究者:The threshold regression approach (4.17% renewable penetration) offers a methodological benchmark for studying energy transition inflection points in emerging markets.

🏢実務担当者:Companies investing in BRI energy infrastructure should note that governance quality and renewable scale are prerequisites for meaningful emissions reduction, not just financial openness.

🏛政策担当者:Policymakers should condition trade and financial integration on renewable energy deployment targets and institutional capacity building, as highlighted by the region's persistent fossil fuel dependence.

Introduction Understanding the drivers of environmental degradation in developing economies is critical, particularly in the Belt and Road Initiative (BRI) region, where rapid economic integration intersects with persistent reliance on fossil fuels. This study investigates how financial integration, trade openness, governance quality, and the transition to renewable energy jointly shape carbon emissions trajectories in Middle Eastern and North African (MENA) economies. Specifically, we address whether financial openness independently influences emissions outcomes and whether renewable energy penetration moderates the intensity of the energy-emissions relationship. These questions are particularly salient for BRI-MENA economies, where structural economic transformation and climate commitments remain contested policy priorities. Methods We analyse a balanced panel of 12 BRI-MENA countries for 1996–2023 (excluding Iraq, due to data constraints). Financial integration is measured using the normalized Chinn-Ito KAOPEN financial openness index. The empirical framework combines panel diagnostic tests, fixed-effects specifications, and heterogeneous panel long-run estimators (CCEMG/AMG). A renewable energy threshold specification identifies critical penetration levels at which the relationship between energy and emissions shifts. All models control for energy use, trade openness, industrialization, GDP growth, and regulatory quality. Results Energy consumption emerged as the dominant driver of CO 2 emissions across specifications, confirming the region's entrenched fossil-fuel dependence. Regulatory quality has a statistically significant but modest mitigating effect. Financial integration, while included in all specifications, shows a substantially weakened direct coefficient once the energy structure and other controls are introduced. The renewable-energy threshold analysis identifies a critical penetration level of approximately 4.17%, above which the marginal emissions intensity of energy use moderately declines, although the underlying energy-emissions relationship remains robustly positive in both regimes. Discussion The findings demonstrate that financial and economic openness alone are insufficient drivers of environmental improvement in the BRI-MENA context. Effective decarbonisation requires: (1) scaled deployment of renewable energy infrastructure; (2) strengthened regulatory institutions capable of enforcing environmental standards; and (3) financial integration mechanisms explicitly channeled toward green infrastructure and low-carbon industrial restructuring. Policy coordination between BRI-MENA governments and development partners should prioritize green finance conditionality and institutional capacity building alongside trade and financial liberalization.

• openalex https://doi.org/10.3389/frevc.2026.1816930first seen 2026-07-14 04:47:25