FACTORS, INFLUENCING CLIMATE CHANGE PERFORMANCE AT COUNTRY LEVEL: EVIDENCE-BASED ON PANEL DATA ANALYSIS

Abstract

This study examines the determinants of climate change performance at the country level using panel data from 2007 to 2021. The analysis employs Generalized Method of Moments (GMM) models to explore the influence of various socioeconomic, environmental, and institutional factors on climate outcomes across multiple countries, such as renewable energy consumption, GDP per capita, carbon footprint (greenhouse gas emissions), innovation (patents), and the quality of climate policies. The GMM model is employed to address potential endogeneity concerns, providing a dynamic perspective on the relationships between these factors and climate performance. The findings from the GMM model reveal that increased renewable energy consumption is strongly associated with improved climate policy performance, highlighting the critical role of renewable energy in driving climate resilience. Economic development, as measured by GDP per capita, also shows a positive relationship with climate performance, suggesting that wealthier countries are better equipped to implement effective climate policies. Innovation, represented by patent activity, emerges as a significant factor, with a strong positive impact on climate policy performance, supporting the view that technological advancement is crucial for enhancing climate outcomes. However, carbon footprints (CFP) were found to have an insignificant negative relationship with climate performance, indicating that environmental footprints alone may not directly influence policy outcomes without the support of strong institutional frameworks and innovative policies. Institutional quality, measured in the GMM model, plays a significant role in climate policy performance, reinforcing the importance of governance in driving effective climate action. The results indicate that countries with stronger institutions are more likely to implement successful climate policies, contributing to better overall climate performance. In conclusion, the GMM findings highlight the importance of renewable energy adoption, innovation, economic development, and institutional quality in enhancing climate policy performance. The study recommends that policymakers need to focus on fostering innovation, improving institutional frameworks, and promoting renewable energy adoption to achieve sustainable and effective climate outcomes.