Rethinking the impact of political regimes on environmental outcomes: the role of economic structure and governance quality in OIC countries

This study investigates the conditional relationships among democracy, economic structure, governance quality, and environmental degradation across 52 member states of the Organization of Islamic Cooperation (OIC) over the period 2012–2023. Employing a dynamic panel System GMM approach, the findings reveal that the effect of democracy on per capita CO2 emissions is not unconditional, but instead depends critically on institutional and structural economic contexts. The results indicate that democracy is negatively associated with lower emissions in the long run; however, this estimated mitigating effect strengthens in countries characterized by a high industrial share, contrary to the carbon lock-in hypothesis. Conversely, higher governance quality is negatively associated with the environmental benefits of democracy, as the emission-reducing effect of democracy weakens and eventually turns positive at high levels of governance quality, suggesting the possibility of state capture by industrial interests. Further heterogeneity analyses demonstrate significant variations across regions, regime types, levels of oil dependence, and income groups, while the core findings remain robust across alternative specifications and 2SLS instrumental variable estimations. Overall, the study concludes that achieving a sustainable green transition in OIC countries requires an integrated strategy that extends beyond electoral democratization to include addressing institutional capture and structural economic transformation capable of reinforcing democratic environmental outcomes.