The Moderating Role of Natural Resources Between Institutional Quality and CO2 Emissions: Evidence From Developing Countries

The recent study aim is to scrutinize the moderating role of natural resources between institutional quality and carbon dioxide (CO2) emissions in 106 developing countries from 1996 to 2017 by using dynamic xed effect, generalized method of moments (GMM) and system generalized method of moments (system GMM) estimators as well as apply the instrumental xed effect, the instrumental time xed effect and instrumental system GMM estimators as robustness. We make use of dynamic models and instrumental system GMM to reduce the result of autocorrelation increasing from misspecication of a model as well as clear the biases from unnecessary data and solve the possible endogeneity issues. The empirical results indicate that nancial development, trade, and institutional factors: corruption perception control, government effectiveness, political stability, regulatory quality, rule of law, and voice and accountability play a vital role in CO2 emissions reduction but natural resources along with economic growth are the core factors that cause CO2 emission in developing countries. On the opposing, natural resources boost the indirect impact of institutional quality on CO2 emissions in developing countries. a openness. continuance, and inuence CO2 Corruption perception signicantly and negatively affects CO2 emissions and the results indicate indicated that a 1% increase in corruption perception reduces 0.03% in CO2 emission of developing countries. Government effectiveness, political stability, regulatory quality, rule of law and voice and accountability also signicantly and negatively inuences CO2 emissions in developing countries and the results indicate that a 1% increase in lack of public goods as considered by the government effectiveness, risk of violence as considered by Political stability and absence of violence, both regulatory quality and voice and accountability as explaining how the economic system and government of country pragmatics somewhat whether or not it practical and problems such as crime (as calculated by Rule of law) reduce 0.20%, 0.14%, 0.248%, 0.15% and 0.09% in CO2 emission. The institution's results conrm that institutions are very important factors that cause CO2 emissions reduction and the results indicate that good quality of institution may assist to reduce CO2 emissions in developing countries. The provide freedom of information and political rights that improve awareness of the public about the optimal utilization of the natural resource, as well as Government and regulatory authorities, play an enthusiastic attention in the decision-making of natural resources so good quality of institutions reduce CO2 emissions of the country. The corruption, political stability and government effectiveness results are supported by Abid, M, (2017) and Abid, M, (2016) but the regulatory quality result is corroborated by Abid, M, well Boschini et al. and Isham et al. indicated that the indirect impact of natural resources through institutions is more inuential. The natural resources association with institutions are argued in the studies (Acemoglu et al. 2002 and Knack and Keefer, 1995). The results indicate that only corruption perception and political stability interaction with natural resources continue reduction in CO2 emissions indicate that corruption, and risk of violence as considered by Political stability plays an important role in natural resources effect on CO2 emissions and suggested that natural resources may assist to reduce CO2 emission through corruption perception and political stability. The moderating role of corruption perception and political stability between natural resources and CO2 emission is essential. Therefore increase in control of corruption and political stability is supportive to decline the inuence of natural resources on CO2 emissions so better the quality of control of corruption and political stability, in the long run, reduce the inuence of natural resources on CO2 emissions in developing countries. While the other institution's factors such as; government effectiveness, regulatory quality, voice and accountability, and rule of law interaction term with natural resources change the coecient sign to signicant and positive which indicates that government effectiveness, regulatory quality, voice and accountability and rule of law badly affect CO2 emissions due to natural resources. The results indicate natural resources badly affect the quality of government effectiveness, regulatory quality, voice and accountability, and rule of law and as a result, increase CO2 emissions. The institution's interaction with natural resources, results indicate that good quality of corruption control and Political stability may assist to reduce CO2 emissions in developing countries and through better, the quality of corruption and political stability can reduce the effect of natural resources on CO2 emissions in developing countries but other institutions factors increase CO2 emissions due to natural resources so better the quality of institution indicators is very important to reduce CO2 emissions in developing countries.


Introduction
The environment is the key anxiety for both developing and developed countries because high-level CO2 emissions affect both developing and developed countries crosswise the World. The environment catches temperature and creates the earth warm. Over more than 50 years, the human movements are liable for approximately the entire rise in CO2 emissions. The major cause of CO2 emission from human moments is from transportation, heat, and burning fuels for electrical energy. CO2 emission is reasoned by ood in different Countries; re in forest is the key essentials that cause the CO2 emission. The above measures reasons to bother the agricultural land, the highly important survival of human beings, natural resources, and infrastructure. These measures are the core anxiety for experts in economics as well as the environment. CO2 emission is a worldwide issue and the entire world is affected by the threats increasing from the decline of the quality of the environment, this is the core anxiety of circumstances that releases greenhouse gases (GHGs).
Developing countries play a vital role in global CO2 emission. According to the World Economic Forum (2019) developed countries have more contribution to global CO2 emission but in the rent year, developing countries contribute a high-level growth of CO2 emissions to the global CO2 emissions. Figure 1 shows that developing countries contribute 60% to the global CO2 emissions and also indicate that China and India have the uppermost 45.33% and 11.33% contributions in developing countries CO2 emission and 27.2% and 6.8% in global CO2 emissions in 2017 (Joint Research Centre, 2019). In addition, since dissimilarities in both China and India growth, these both counties set CO2 emissions reduction assurances. China with somewhat high-level urbanization and industrial growth has created an o cial assurance to climax its emission of CO2 by 2030 and struggle to get to the climax as soon as possible (National Development and Reform Commission of China, 2015). India with low per capita emission of CO2 and lack of electricity has no apparent aims for control of CO2 emission but has committed to severing per capita emission of GDP by around 33% by 2030 (Ministry of Environment, Forest, and Climate Change of India, 2015). Regards as the huge level of CO2 emissions and the emissions reduction assurance, China and India has a vital suggestion for achieving an enhanced grab of the development and the climax of CO2 emission in developing countries.
Developing countries have CO2 emissions issues since the 1990s, mostly the Asian countries, as the developed countries have transferred their industries to developing countries that produce a large number of CO2 emissions Acquaye et al. (2017). Asian countries have the environmental pollution issues cause of the ows of industries abuse into the river that reasons to pollutants of water which indirectly affects the citizen's health He et al. (2012).
Development of some countries of Asia is increasing from the previous few years Bajpai (2018) and revealed that these countries of Asia have scheduled the prevalent economy of the globe such as China, as well as India and Singapore, are respectively scheduled in biggest the economy of the globe. Development directly affects economic growth but growth badly affects environmental pollutants which are the core cause of citizen's health, deforestation, and environmental pollutant Saboori and Sulaiman (2013). The link between energy use and environmental pollutants assessed by Huang et al. (2008) and demonstrated that use of energy resources boost GHGs and badly affects the environment pollutant.
The recent study aims to scrutinize the association between natural resources, institutional quality, and CO2 emissions in developing countries due to large quantity of natural resources and bad quality institutional indicators in developing countries. Figure 2 shows the average natural resources rents in developing countries which are 8.02% in 2017 (World Bank, WDI, 2019). Figure 3 shows the average corruption perception index in developing countries which indicates 36.72% in 2017 (Corruption Perception Index, 2019). Figure 4 shows the average of institutional factors in developing countries which indicate the bad quality of institutions such as; -0.34% government effectiveness, -0.24% political stability, -0.33% regulatory quality, -0.35% rule of law and − 0.26% voice and accountability in developing countries in 2017 (World Bank, WDI, 2019).
Based on the above details, an inspection into the moderating role of the natural resource between institutional quality and CO2 emission in developing countries are reasonable because a few studies have explored association between natural resources and CO2 emissions for example; in BRICS countries Dong et al.  Abid, M, (2016) in Africa countries of Sub Sahara but our contribution the literature to explores the moderating role of natural resource between institutional quality and CO2 emissions that no study has scrutinized so ful ll this gap to the literatures as Wegenast (2013); Eregha and Mesagan (2016) and Aleksynska and Havrylchyk (2013) indicated that natural resources have a vital role in institutions. So this is the rst study to scrutinize the moderating role of natural resource between institutional quality and CO2 emissions in developing countries.
To ful ll this gap in the literature, the recent study aims to inspect the moderating role of natural resource between institutional quality and CO2 emission in 106 developing countries from 1996 to 2017. Firstly, this is the new work to explore the relationship between natural resources, institutional quality, and CO2 emissions in developing countries. Secondly, we add the moderating role of natural resources between institutional quality and CO2 emissions which no study has examined in the previous literature. Thirdly, we are taking lagged of all independent variables as instruments and use instrumental xed effect and time xed effect and system GMM estimators as robustness to deal with the endogeneity issue which no study has considered in the literature. This study will help the policymakers and government to use advanced equipment for exploitation of natural resources and invent suitable exploitation during agriculture, as well as mining will upgrading quality of the CO2 emissions and also will reduce the indirect impact of institutional quality on CO2 emissions.
The residual parts of the current paper are ordered as follows. Section 2 gives an analysis of the correlated literature but Sect. 3 provides data and econometric methods while Sect. 4 outlines the observed results and discussions and Sect. 5 provides conclusion and policy recommendations.

Literature Review
The quality of Institutions and bureaucratic systems, corruption, and the rule of law contribute vita role to the quality of the environment in institutional theories. The provide freedom of information and political rights that improve awareness of the public about the optimal utilization of the natural resource (Bernauer et al. 2012;Barbier 2015). Government and regulatory authorities play enthusiastic attention in the decision-making of natural resources to maintain the economic system. However, natural resources, particularly minerals and fossil fuels, are essential to economic development as they have an essential contribution to goods and services production. Yet, the costs of natural resources by the burning of fossil fuels, boost CO2 emissions into the environment, gases that absorb and emit thermal emission and are a most essential provider to the 'greenhouse effect'. Natural resources play a very important role in institutions (Wegenast 2013; Eregha and Mesagan 2016) and Aleksynska and Havrylchyk (2013). Natural resources directly affect economic growth Sachs and Warner (1995) and indicated that this impact is more signi cant than the indirect impact through institutions. Boschini et al. (2007) and Isham et al. (2005) indicated that the indirect impact of natural resources through institutions is more in uential. The natural resources association with institutions is argued in the studies (Knack and Keefer, 1995).
Some of the literature such as North (1990) highlighted the importance of institutional factors for under developing and developing countries after emphasizing the less support to institutions for productive movements. Neumayer (2002) suggested that democracy play important role in the quality of the environment. The political institutions direct through an appropriate governance structure that affects the quality of the environment (Barret and Graddy 2000). Moreover, Gallagher and Thacker (2008) found a negative impact of democratic quality on the quality of the environment. Dasgupta and Mäler (2006) found a positive impact of law and order on environmental quality through the way of supporting enhanced abatement policies. Moreover, Panayotou (1997) con rmed that institutional factors have a vital role in enhancing the quality of the environment, even if a country has a low level of economic growth, means that the institutional factors can assist to reduce the environmental cost of augmented economic development, therefore, enable countries to alleviate the pollution of environment. In addition, Gagliardi (2008) indicated that better quality of institutions can assist to depress exploitation, an advance joint association among the agents, therefore, support agents to incorporate the externalities. As a result, the better quality of institutions can provide inclusive resolution to be executed for the betterment of environmental quality and improvement of economic development (Subramanian, 2007). Moreover, institutional quality and CO2 emissions assessed in the European Union and the Middle East and Africa Abid, M, (2017) and found a reduction in CO2 emission due to control of corruption, Government effectiveness, political stability, and regulatory quality and indicated that control of corruption, Government effectiveness, political stability, and regulatory quality are important factors to reduce CO2 emissions. Abid, M, (2016) found that Control of corruption, government effectiveness, political stability and democracy play a vital role in CO2 emissions reduction but the rule of law and regulatory quality boost CO2 emissions and also indicated that get better the quality of corruption, government effectiveness, political stability and democracy lead to improve the quality of CO2 emissions in Sub Saharan countries of Africa. Rules on a rm's entrance into the market are linked with better informal economies, high corruption, and less democratic governments. Government e ciency may possibly play a vital role in CO2 emission reduction Djankov and Hoekman (2002). Pushak et al., (2007) indicated that Countries that continue e ciently governments can get assurance from producers and more successfully implement rules as regards to CO2 emission. Corruption boosts CO2 emission Cole (2007) and indicated that corruption better the quality of CO2 emission through the negative effect of corruption on economic growth. The role of economic growth is totally reverse to both change in climate and CO2 emissions. Industrial ventures in the improvement of economic growth augment natural resources that increase the hurriedness of natural resource tiredness; with quantity growing along with hazardous misuse manufactured Sarkodie, S. A. (2018). Financial development and CO2 emission scrutinized in Malaysia Shahbaz, M., et al. (2013) and found that nancial development plays an important role in CO2 emission mitigation and indicated that nancial sectors might offer the loan that is associated with CO2 emission mitigation. Financial sectors might also insert CO2 emission associated circumstances or allocate CO2 linked charges in their nancial merchandise. Financial development encourages foreign rm's which can better the quality of CO2 emission (Frankel and Romer, 1999). Second, most well-organized nancial organizations offer opportunities to the citizens to grip liquid assets and invest in gainful corporations that make use of cleaner equipment and environmentally pleasant methods of production. These types of equipment better the quality of CO2 emissions (Birdsall and Wheeler, 1993).

Data
This study uses 106 developing countries panel data from over the period 1996 to 2017 to evaluate the moderating role of natural resources between institutions and CO2 emission in developing countries.  (See; table A1 and table A2 in the appendix).

Dynamic models
We are using the dynamic xed effect, GMM method that suggested by (Arellano and Bond, 1991) along with System GMM method suggested by Bover, 1995 andBlundell, andBond, (1998). We are using GMM and system GMM because these models deal with endogeneity issues and ignore individual particular heterogeneity and estimators such as simple xed effect as well as OLS estimator are not dependable estimators in such type cases because of huge difference between time periods and countries as suggested by Asongu, and Acha-Anyi, (2017). We exercise system GMM since this model calculates the factors with endogenous to xed effects estimator with a lagged of dependent variables and lagged of endogenous variables as instruments and compacts with unobserved heterogeneity. The lagged values of the dependent variable are 0.4% in the GMM model and 0.9% in system GMM but decrease to 0.6% in instrumental system GMM estimator System GMM deal with the endogeneity issues through means of instrumentations and controls over-identi cation and also deal with cross-sectional dependence (Tchamyou, 2019a, and 2019b). The system GMM implements in advance of the difference GMM using more assumptions that no connection is examined between the rst differences of appliances. Bond We indicate our dynamic model as follows: The above equation is the dynamic equations, where, i represent the country, t represents time and ε i,t is the error term. CO2 is CO3 emission, NR is natural resources (Coal, oil, mineral and forest rents), logGDP is the log of GDP per capita, TO is trade openness, FD is nancial development, Institutions indicates six variables such as; CPI, GE, PS, RQ, RL and VA. Institutions*NR is an interaction term between institutional factors and natural resources. We take the lag of dependent variable CO2 i,t−1 because the lag of the dependent variable reduces the result of autocorrelation increasing from misspeci cation of model.
The study report endogeneity issue between some independent variables so, we are taking lagged of all independent variables to deal with this issue and get the following model.
Given the complexity of nding superior instrumental variables, a helpful method to deal with the endogeneity issue is to take the lag of endogenous variables as instruments and use System GMM estimator. This is a suitable procedure to deal with endogeneity issue so, therefore; we are using system GMM estimator and also taking lag of all independent variables as instruments in xed effect, the time xed effect, and system GMM estimators as robustness. Wu 3.3 Multicollinearity test Table 1 shows the result of the correlation between independent variables. We nd less than 0.6 coe cient values for all the independent variables except for institutions. The uses of all the independent variables except institutions in our models do not create any issue of multicollinearity as their coe cient values less than 0.70 (Kennedy, 2008) but the institution variables, we use individually in our models. Notes: *** = Signi cance at 0.01, ** = Signi cance at 0.05 and * = Signi cance at 0.1.  Table 2 reports the descriptive statistic. We nd the bad quality of institutional quality in developing countries and large quantities of natural resources and high economic growth which badly affects CO2 emission.

Results And Discussions
We use dynamic xed effect, GMM and system GMM estimators as well as apply an instrumental xed effect, instrumental the time xed effect, and instrumental system GMM estimators as robustness to deal with the endogeneity issue between some independent variables and use lagged independent variables as instruments as the previous literature Wu, and Chen, (2019), Liu, H. Y., et al. (2017) and Tang, and Zhang, (2016) suggested that given the complexity in nding superior instrumental variables, a helpful method to deal with the endogeneity issue is to take the lag of endogenous variables as instruments. Table 3 shows the result of a dynamic xed effect but Table 4 demonstrates the result of the GMM estimator while Table 5 shows the result of the system GMM estimator as well as Table 6 shows the result of instrumental system GMM estimator as robustness where we use lagged independent variables as instruments. The lagged level values of CO2 emission show that previous year CO2 emission effects of current CO2 emissions around 0.6%, 0.4% and 0.9% in Tables 3, 4 and 5 but 0.6% in instrumental system GMM estimator. The sargan test, Arellano and Bond test con rm a better-quality act in all models, as well as Hansen test, also perform well in Table 6.
We also run the models for the association of natural resources and institutions factors with CO2 emission without interaction term and the details results are reported in tables A3 to A5 where, Natural resources in uence CO2 emission signi cantly and positively in all models. The results con rm that natural resources are the core cause that augments CO2 emissions in developing countries and the results indicate in both system GMM and dynamic xed effect that a 1% increase in natural resources increases 0.2% in CO2 emissions of developing countries. The large development of the available natural resources manipulate a country abilities to repeat resources but such alteration from common equipments that abuses more resources to advanced equipments that consists of value-addition, recycling, innovation and utilize again and again, that alteration in natural resources will augment economic growth but as a results badly affects environment. Economic evolution impels industrial ventures that advance natural resources but augment the hurriedness of natural resources tiredness; with quantity growing, along with insecure misuse produced Muhammad, B., et al. (2021). Moreover, most natural resources countries misuse during agriculture, deforestation, and mining affect CO2 emissions.      Notes: *** = Signi cance results at 0.01, ** = Signi cance results at 0.05 and * = Signi cance results at 0.1.   Notes: *** = Signi cance results at 0.01, ** = Signi cance results at 0.05 and * = Signi cance results at 0.1.
Economic growth in uences CO2 emission signi cantly and positively in all models and the results point out that economic growth is the core reason of CO2 emissions in developing countries. The results indicate in dynamic xed effect and GMM estimators that a 1% increase in economic growth increases in CO2 emission around 0.6% but system GMM estimator results indicate that a 1% increase in economic growth increases in CO2 emission around 0.2%. Most developing countries struggle for development and get high-level economic growth but people start to give less attention to the environment and as a result, increase CO2 emission that affects the citizen's health. CO2 emissions and economic growth boost mutually until a certain rotating circumstances in the growth is accomplished, at the back the CO2 emission reduces but overturns after that. Thus, an overturned U-shaped connection between CO2 emission and growth expects a dynamic process of structural transform linked with growth. The CO2 emissions manipulates through growth with the three most important ways: composition, technology impacts and scale.
Therefore, the environment is considered as a process that products from composition, technology impacts and scale. At that stage, as growth enhances, the public will be expected to craving clean approaches intended at protecting the CO2 emission. Climax consequential in the CO2 emissions alteration is apparently to be in motion eventually as of technological transform and improved concerns due to CO2 emissions Lorente, and Álvarez-Herranz, Corruption perception signi cantly and negatively affects CO2 emissions and the results indicate indicated that a 1% increase in corruption perception reduces 0.03% in CO2 emission of developing countries. Government effectiveness, political stability, regulatory quality, rule of law and voice and accountability also signi cantly and negatively in uences CO2 emissions in developing countries and the results indicate that a 1% increase in lack of public goods as considered by the government effectiveness, risk of violence as considered by Political stability and absence of violence, both regulatory quality and voice and accountability as explaining how better, the quality of corruption and political stability can reduce the effect of natural resources on CO2 emissions in developing countries but other institutions factors increase CO2 emissions due to natural resources so better the quality of institution indicators is very important to reduce CO2 emissions in developing countries. Table 6 indicates the robust results of instrumental system GMM estimator that use lagged all independent variables as instruments to deal with the endogeneity. The results indicate that institutional factors continued reduction in CO2 emissions while on the other side natural resources not only increase CO2 emissions but also indirectly increase the impact of institutional quality on CO2 emissions. The institutional factors affect CO2 emissions through natural resources results indicate that high-level exploitation of natural resources and huge scale natural resources badly increase the impact of institutional quality on CO2 emissions as well as the large development of the available natural resources affect talent of a country to reproduce resources while such a alteration from customary equipments that exploit more quantity of resources to advanced equipments that comprises arti cial resources, value-addition, recycling, innovation and use again and again that alteration of natural resources will improve their growth but refuse the CO2 emissions and indirectly increase the impact of institutional quality on CO2 emissions.

Conclusion And Policy Recommendations
The recent study assesses the moderating role of natural resources between institutional quality and CO2 emissions in developing countries. This is the rst study to inspect the moderating role of natural resource between institutional quality and CO2 emission in 106 developing countries from 1996 to 2017 by using GMM, and system GMM as well as dynamic xed effect estimators as well as use instrumental time xed effect and instrumental system GMM estimators as robustness to deal with the endogeneity issue.
The empirical results indicate that natural resources and economic growth are the core causes that enhance CO2 emission in developing countries because developing countries are struggling to get a high level of economic growth and try for the exploitation of more natural resources and use of old equipment during the exploitation of natural resources and also misuse during mining as a result, boost CO2 emission. Financial sector investment in renewable energy and International trade plays an important role in CO2 emission mitigation. Moreover, institutional factors; corruption perception control, government effectiveness, political stability, regulatory quality, rule of law and voice, and accountability have the most important role in a CO2 emissions reduction of developing countries and especially corruption perception control and political stability interaction term with natural resources signi cantly and negatively affect CO2 emission and indicate that corruption perception control and political stability reduce the effect of natural resources on CO2 emission in developing countries. However, the government effectiveness, regulatory quality, rule of law and voice and accountability interaction term with natural resources signi cantly and directly affect CO2 emission in developing countries and the results indicate that natural resources boost the role of government effectiveness, political stability, regulatory quality, rule of law and voice, and accountability in CO2 emission in developing countries.
The results of the study suggest that natural resources are not only directly affect CO2 emission but also increase the indirect impact of institutional quality on CO2 emissions so the developing countries should use advanced types of equipment for exploitation of natural resources and build suitable use during agriculture, deforestation and mining will improve the CO2 emissions quality and also will reduce the indirect impact of institutional quality on CO2 emissions. Developing countries must compose suitable policies to augment the make use of renewable energy that will defend their CO2 emissions and boost their economy. The developing countries must award more concentration on the CO2 emissions throughout a great effort for economic augmentation and build suitable policies for use of chemical because the abuse of the chemical into the air and water badly affects the environment. The government should also make such type policies that people start to give more attention to the environment because human

Declarations
Funding: This research did not receive any funding.