This study examines the impact of economic institutions on ecological footprint and their spatial spillover effects globally, covering the period from 2000 to 2021. We focus on economic institutions because institutions that espouse economic freedom are essential for safeguarding environmental quality. We hypothesize that the spatial influence of these institutions varies both globally and regionally. The Moran's I test reveals significant spatial associations among countries, while the Wald and likelihood tests identify the spatial Durbin model as the most appropriate approach. Furthermore, the Hausman test indicates that a fixed effects model best captures the coefficients. Globally, economic institutions demonstrate a direct reduction effect of 16.4% and a spillover reduction effect of 4.4% on ecological footprint. However, these effects show considerable regional variation. In North America, East Asia and the Pacific, the Middle East, North Africa, Europe, and Central Asia, economic institutions effectively reduce ecological footprint, while their impact is negligible in other regions. These regional differences underscore the importance of addressing institutional deficiencies, encouraging policymakers in regions with limited effects to learn from best practices to enhance institutional effectiveness. These insights collectively advance the literature on economic institutions and environmental economics, emphasizing regional policy adaptation and the transboundary effects of institutional quality. The findings further reveal that economic institutions moderate GDP per capita to curb ecological footprint significantly. These conclusions hold even after addressing endogeneity using the generalized spatial two-stage least squares method. The study recommends that policies promoting economic freedom are essential to mitigate global environmental degradation.

The paramount vision of every country or sub-regions is to attain economic growth and sustainable economic growth. The paradigm drift of studies into foreign aid and sustainable economic growth has shown conflicting results that play on researchers to fill the gap of knowledge void. The plurality of studies looked at economic growth and foreign aid in single countries. However, one of the major determinants of sustainable growth such as CO₂emissions and trade goes beyond the boundaries of a country. Deductively, grouped countries or sub-regional studies are needed to ascertain the heterogeneous relationship and cross-sectional dependency among panels grouping. We fill these gaps with the recent empirical methodology to unveil the impact of foreign aid, CO₂emissions, trade openness, and energy consumption on economic growth. Thus a percentage rise in foreign aid corresponds to different significant weights in all panel groupings with exception of Southern African Development Community, which unveiled a non-significant estimate. Whereas trade openness in all panel grouping indicated a significant weight on economic growth. An increase in CO₂emissions has a significant material effect on economic growth in Common Market for Eastern and Southern Africa, Economic Community of West African States, and Community of Sahel-Saharan States. The impact of energy consumption on economic growth across the panel groupings was statistically significant with Common Market for Eastern and Southern Africa having the highest weight impact. These results obtained in this study indicate that foreign aid, energy consumption, trade openness, and CO₂emissions are positively correlated with economic growth. Based on the finding, the significant of the policy implications suggested. (a) The need for a paradigm shift from fossil fuel sources to renewables is encouraged in the various trading blocs (b) The need to embrace carbon storage and capturing techniques to decouple pollutant emissions from economic growth on the continent’s growth trajectory.