the Environmental Kuznets Curve (EKC). The papers introduces a novel variable to capture trade openness, which appears to be a crucial factor in inter-regional co-operation and development, in order to evaluate its effect on the environment, The empirical analysis is based on a sample of nine signatories to the Comprehensive and Progressive Agreement for Trans-PacificPartnership (CPTPP) for the period 1971-2014, which is based on data availability. The empirical analysis is based on several time series econometric methods, such as the cointegration test, two long run estimators, namely the fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) methods, as well as the Granger causality test. There are several noteworthy empirical findings: it is possible to confirm the U-shaped EKC hypothesis for six countries, namely Australia, Canada, Chile, New Zealand, Peru and Vietnam; there is no evidence of the EKC for Mexico; a reverse-shaped EKC is observed for Japan and Malaysia, there are long run relationships among the variables, the adoption of either renewable energy, or alternative energy and nuclear energy, mitigates CO 2 emissions, trade openness leads to more beneficial than harmful impacts in the long
In the literature, there are several studies, theoretical and empirical, which put the accent on the relationship between energyconsumption, economicgrowth, and the emission of CO2 that may ex- ist. Empirically it has been tried to find the direction of causality between energyconsumption and economic activities for some countries employing the Granger Test, ECM and other techniques. In recent papers, Zhang and Lin (2012) chowed that urbanization increases energyconsumption and CO2emissions in China using panel estimation. They proves that the effects of urbanization on en- ergy consumption vary across regions and decline continuously from the western region to the central and eastern regions. Shyamal and Rabindra (2004) examined the different direction of causal rela- tion between energyconsumption and economicgrowth in India through a co-integration technique combined with the Granger causality test. They find the existence of a bi-directional causality be- tween energyconsumption and economicgrowth. Wang et al. (2016) used a co-integration approach in China data to examine the relation between economicgrowth, energyconsumption and CO2 emis- sion. Granger causality test identified a bi-directional causal relationship between economicgrowth and energyconsumption, and a uni-directional causal relationship was found to exist fromenergyconsumption to CO2emissions. Saidi and Hammami (2015) studied the impact of energy consump- tion and CO2 emission on economicgrowth for 58 countries. They have used simultaneous equations models estimated by the GMM-estimator and they find evidence that energyconsumption has a pos- itive impact on economicgrowth and that the CO2emissions have a negative impact on economicgrowth.
In a series of studies, Apergis and Payne (2010a, 2010b, 2011a, 2011b, 2011c, 2012) investigate the causal relationship between renewable energyconsumption and economicgrowth for many groups of countries ranging from developed to developing countries. The authors use various cointegration techniques and causality approaches within a panel data framework. In the majority of cases, empirical results reveal that cointegration relationships and both short-run and long-run bi-directional causality exist among variables in question, proving the validity of the feedback hypothesis. Employing a panel error correction model within a multivariate model, Apergis et al. (2010) examine the causal relationship between CO2emissions, nuclear energyconsumption, renewable energyconsumption and economicgrowth for a panel of nineteen developed and developing countries aver the period 1984- 2007. Empirical evidence shows that there exists short-run bi-directional causality between renewable and nuclear energyconsumption and economicgrowth, supporting therefore the feedback hypothesis. The long-run analysis reveals the existence of a unidirectional causality running from the consumption of both nuclear and renewable energy to economicgrowth, which suggests the validity of the growth hypothesis.
Compared to previous studies (see table1), this paper used simultaneous equations based on structural modeling to study of the nexus between energyconsumption, CO2emissions and economicgrowth in the Middle East and North Africa (MENA) region. As we can see, about the emerging economies, our literature review generally indicates that little attention has paid to smaller emerging economies, particularly in MENA region. This region has some of the largest energy reserves in the world. Yet, while the region is trying to industrialize and modernize its economies, there are the challenges of the carbon emissions. Moreover, energyconsumption is the most significant source of pollution and, in terms of particulate matter concentrations; MENA represents the second most polluted region in the world – after South Asia – and the highest CO 2 producer per dollar of output. The model allows examining at the
Three research aspects in literature exist on the relationship between economicgrowth, energyconsumption and environmental pollutants (Acaravci & Ozturk, 2010a; Alkhathlan & Javid, 2013; Jafari, Ismail, Othman, & Mawar, 2015; Baek & Kim, 2011). The first aspect, which is considered as one of the most significant empirical relationships tested in the economic literature, focuses on the relationships between economicgrowth and environmental pollutants: Farhani , Shahbaz , Sbia , and Chaibi (2014), Akpan and Abang (2015), Dinda and Coondoo (2006), Odhiambo (2011), Paresh and Narayan (2010), Kim , Lee , and Nam (2010), Kim and Baek (2011), Ghosh (2010) and others. The main aim of these studies are testing the validity of the environmental Kuznets curve (EKC) hypothesis which claims an inverted U-shaped relationship between the level of environmental degradation and income growth. This is to mean that environmental degradation increases with per capita income during the early stages of economicgrowth, and then declines with per capita income after arriving at a threshold (Acaravci & Ozturk, 2010a; Saidi & Hammami, 2015). The first empirical evidences on EKC hypothesis appeared in three independent seminal working papers (Dinda, 2004): Grossman and Krueger (1991), Shafik and Bandyopadhyay (1992) and Panayotou (1993). Literature reviews by Lapinskienė and Peleckis (2017), Stern (2004) and Dinda (2004) assert that previous EKC studies have failed to provide clear and inclusive findings on the inverted U-shaped relationship between the environment and economicgrowth. Moreover, Stern (2004) and Narayan and Narayan (2010) mentioned that most of the EKC literatures are based on weak econometric modeling.
Alkhathlan & Javid, 2013; Jafari, Ismail, Othman, & Mawar, 2015; Baek & Kim, 2011). The first strand focuses on the relationships between economicgrowth and environmental pollutants: Farhani , Shahbaz , Sbia , and Chaibi (2014), Akpan and Abang (2015), Dinda and Coondoo (2006), Odhiambo (2011), Paresh and Narayan (2010), Kim , Lee , and Nam (2010), Kim and Baek (2011), Ghosh (2010) and others. These studies are closely related to testing the validity of the so-called environmental Kuznets curve (EKC) hypothesis which postulates an inverted U- shaped relationship between the level of environmental degradation and income growth. This is to mean that environmental degradation increases with per capita income during the early stages of economicgrowth, and then declines with per capita income after arriving at a threshold (Acaravci & Ozturk, 2010a). First set of empirical EKC studies appeared independently in three seminal working papers (Dinda, 2004): Grossman and Krueger (1991), Shafik and Bandyopadhyay (1992) and Panayotou (1993). The common point of these seminal works is the assertion that the environmental quality declines at the early stages of economicgrowth and subsequently improves at the later stages. Literature reviews by Lapinskienė and Peleckis (2017), Stern (2004) and Dinda (2004) assert that previous EKC studies have failed to provide clear and inclusive findings on the inverted U-shaped relationship between the environment and economicgrowth. Moreover, Stern (2004) and Narayan and Narayan (2010) noted that most of the EKC literatures are econometrically weak.
By 2050, this demand is approximately projected to reach 2,900 TWh (Fichtner, 2011). But only recently, renewable resources across the region have been accorded priority. Governments of the MENA countries make efforts to use this potential in order to require additional technological improvements, cost reductions, and the adoption of favorable policy regimes. The use of renewable energy (hydro, wind, biomass, geothermal, and solar) seems the greatest solution to reduce the severity of the environmental problems, to ensure the improvement of social welfare, and to innovate the green technology of the industrials firm’s payoffs. The potential of the major renewable energy sources in the MENA Region is summarized below.
Common and Barbier, 1996). Using Toda and Yamamoto (1995) approach, Soytas and Sari (2007) found that CO2emissions granger cause energyconsumption in Turkey but not vice- versa. So, whether continued increase in national income brings more degradation to the environmental quality is much critical for the design of development strategies for developing economies (Ang, 2007). The author found that CO2emissions granger cause to the output which is conflicting to the EKC hypothesis. Elif et al., (2009) found that a monotonically increasing relationship between CO2 and income in Turkey. However, the empirical evidence remains controversial and ambiguous until to date and there is no agreement in the literature on the economic level at which environmental degradation starts declining (Dinda, 2004). We have chosen Bangladesh as a case study for some important reasons. First, the energy sector is not well organized (Mozumder and Marathe, 2007) in Bangladesh. It is suspected that economy grows with energyconsumption grow. It is an energy deficit country. The major energy consists of natural gas (from which almost half of total is used for electricity production), petroleum and coal (BBS, 2005). The growth rate of economy is about 6% which is expecting (by policy makers) to rise over time. Since independence, the economy is growing moderately ranging from average economicgrowth 4 to 6 per cent per annum (BBS, 2005). The government makes strategic policies to increase the gross domestic product (GDP) growth at least by 2% more by 2015 (Six-five year plan, GOB, 2010). If GDP growth is associated with higher energyconsumption and causality runs fromenergy to GDP, therefore, very often lack of smooth energy supply might be a serious constraint in the future to continue the same growth or to increase as planned. This can be true in the case of electricity consumption (when electricity consumption is used as a proxy for energy) in Bangladesh as well.
Sari and Soytas (2009) investigate the relationship between carbon emissions, income, energy and total employment in five selected OPEC countries (including two MENA countries: Algeria and Saudi Arabia) for the period 1971–2002. They mainly focus on the link between energy use and income. Employing the autoregressive distributed lag (ARDL) approach, they find that there is a cointegrating relationship between the variables in Saudi Arabia and conclude that none of the countries needs to sacrifice economicgrowth to decrease their emission levels. Recently, Narayan et al. (2010) tested the Environment Kuznet’s Curve (EKC) hypothesis for 43 developing countries for the period from 1980 to 2004. They examined the EKC hypothesis based on the short- and long-run income elasticities vis-à-vis CO 2 emissions; that is, if the long-run income elasticity is smaller than the short-run income elasticity then it is evident for them that a country has reduced carbon dioxide emissions as its income has increased. They found that for the Middle Eastern panel, the income elasticity in the long run is smaller than the short run, implying that carbon dioxide emission has fallen with a rise in income. By using the same methodology Jaunky (2010) tested the EKC hypothesis for 36 high-income countries (including three MENA countries: Bahrain, Oman and UAE) over the period 1980-2005. Carbon dioxide emissions and GDP series are integrated of order one and cointegrated especially after controlling for cross-sectional dependence. Unidirectional causality running from real per capita GDP to per capita CO 2 emissions was uncovered in both the short run and long run. The empirical analysis based on individual countries suggests that for Oman (and for other 6 non MENA countries), as well as for the whole panel, CO 2 emissions have fallen as income rises in the long run. A 1% increase in GDP generates an increase of 0.68% in CO 2 emissions in the short run and 0.22% in the long run for the panel. These results do not provide evidence in favor of the EKC hypothesis but indicate that over time CO 2 emissions are stabilizing in rich countries.
renewable energyconsumption, international tourism and trade, the empirical analysis will first test the integration order of each variable. Panel unit root tests of the first-generation can lead to spurious results (because of size distortions) if significant degrees of positive residual cross-section dependence exist and are ignored. Consequently, the implementation of second- generation panel unit root tests is desirable only when it has been established that the panel is subject to a significant degree of residual cross-section dependence. In the cases where cross- section dependence is not sufficiently high, a loss of power might result if second-generation panel unit root tests that allow for cross-section dependence are employed. Therefore, before selecting the appropriate panel unit root test, it is crucial to provide some evidence on the degree of residual cross-section dependence.
and this is true irrespective of the particular group of country under investigation. What is also true for all groups of countries is the fact that COALC is losing its importance as an energy source. This could be indicative of a recent trend in both developed and developing countries to produce oil and natural gas via the method of fracking as opposed to the emission-intensive source of coal (see, inter alia Howarth et al., 2011; Yang et al., 2012; Chen and Golley, 2014). A final issue that deserves mention is that focusing on the REC-growth nexus, IRFs indicate that REC does not instigate growth in any of the groups under investigation. Findings relating to REC are in line with Ocal and Aslan (2013) who report that there is negative impact of REC on economicgrowth. What is more, Ocal and Aslan (2013) provide evidence in support of the conservation hypothesis, while at the same time, they stress the fact that renewable energy is an expensive energy resource especially for developing countries. Re-iterating a point made in the previous section, these results pose a criticism of the inverted U-shaped EKC . To be more explicit, according to our results, countries cannot simply grow out of environmental pollution, as, apparently, the process of growth even at advanced stages of economic development inevitably entails the degradation of the physical environment.
Existing literature that assesses the nexus between economic development, primary energyconsumption, and CO2emissions has been a point of interest for many scholars. Yet, there is no such existing literature that targets assessing such relationship for the case of Morocco. The following contribution determines the long run relationship between these variables using an autoregressive distributive lag model (ARDL) bound test that is developed by Pesaran et al. (2001). Findings indicate that there is a significant co-integration between the variables of interest, meaning that the long run relationship between them exists. Findings also show that energyconsumption has direct positive effect on economicgrowth but it may have larger negative effect on economicgrowth indirectly through higher carbon dioxide emissions.
2009; Pao & Fu 2013; Tugcu et al. 2012; Long et al. 2015; Shafiei & Salim 2014; Florez-Orrego et al. 2014; Farhani & Shahbaz 2014; Ben Jebli & Ben Youssef 2015; Shabbir et al. 2014). The golden result of most of these studies proves the significant role of renewable energyconsumption in the CO2 mitigation in various countries. Eventhough, some studies (e.g. Seker and Cetin, 2015) failed to find any evidence of short or long-run relationship between consumption of different energy resources- economicgrowth or consumption of different energy resources- CO 2 emissions.
Energy production and consumption, energy density, the status and price of energy all play a critical role in the development trend of CO2 emission. In this sense, it acts as an engine of economicgrowth and development. Therefore, a country with heavy utilization of energy is thought to also have a high life standard. However, high energy use causes high carbon emission which has a reverse effect on the environment and economic activities (Alkhathlan and Javid, 2012). The constantly rising amount of CO2 and its repression on the greenhouse effect shows the gravity of this problem. Scholars and policy-makers have a consensus on the necessity of reducing the emission of greenhouse gas to mitigate global warming (Zhang and Cheng, 2009). Emission of pollution factors tend to increase with the expansion of economic activities. On the other hand, clean technologies generate less pollution per unit and members of society can focus their demands on a healthier and more sustainable environment. In this case, the country can resort to implementing more strict environmental controls (Grossman and Krueger, 1991). According to EKC hypothesis, the connection between income per capita and pollutant emissions per capita is in the shape of an inverted-U curve. It shows that economic activities may benefit environmental quality after a certain point (Niu and Li, 2014). Therefore, environmental harm is inevitable at the first stages of economicgrowth and for this reason countries are obliged to endure it until the reversing effect (Figure 1) (Shahrin and Halim, 2007).
order of integration of the series. This requires that the variables should be integrated at I(0) or I(1) or I(0)/I(1). The computation of the ARDL F-statistic becomes useless if none of the variables is stationary at I(2) or beyond that order of integration. In doing so, we have applied Zivot-Andrews structural break trended unit root test to ensure that all the variables are integrated at I(0) or I(1) or I(0)/I(1) 5 . The results of Zivot-Andrews ) structural break trended unit root test are reported in Table-1. Our empirical evidence discloses that all the series show unit root problem at their level but found to be integrated at I(1). This entails that the series is stationary in their first differenced form. So, unique level of the variables leads us to examine the existence of a long run relationship between economicgrowth, energyconsumption, financial development, trade openness and CO 2 emissions by applying the ARDL bounds testing approach
Trade openness has a statistically negative impact on CO 2 emissions for Australia, Japan, Mexico, Peru, and Vietnam, but a positive effect for Malaysia and New Zealand. The evidence for Canada and Chile is inconclusive. An interesting implication is that, based on the specific country characteristics, trade expansion could be more harmful than beneficial for the environment. As such, different countries should encourage the implementation of an appropriate strategy and policy in favour of trading environmentally-friendly products in order to gain the benefits from the establishment of the CPTPP, as well as to minimize the negative impacts on the environment of conducting international trade.
In recent studies, Payne  and Ozturk  reviewed the existing literature between energyconsumption and economicgrowth nexus and provided four empirical competing hypotheses for said issue. Such as; (i) growth hypothesis i.e. energyconsumption Granger causes economicgrowth implies that energy reduction policies should be discouraged and new sources of energy must be explored, (ii) if causality is found running fromeconomicgrowth to energyconsumption, then energy reduction policies would not have adverse affect on economicgrowth because economicgrowth of the country does not seem to be dependent on energy, (iii) feedback hypothesis implies the interdependence of energyconsumption and economicgrowth. A rise in economicgrowth leads to increase in energy demand, which in return stimulates economicgrowth. In such a situation, energy conservation policies are detrimental for economicgrowth and (iv) no causality between energyconsumption and economicgrowth infers neutrality hypothesis indicating that energy and growth are not interdependent. The adoption of conservation and exploration of energy policies will not favorable affect the economicgrowth.
In this study we examine the dynamic interrelationship in the output–energy– environment nexus by applying panel vector autoregression (PVAR) and impulse response function analyses to data on energyconsumption (and its subcomponents), carbon dioxide emissions and real GDP in 106 countries classified by different income groups over the period 1971–2011. Our results reveal that the effects of the various types of energyconsumption on economicgrowth and emissions are heterogeneous on the various groups of countries. Moreover, causality between total economicgrowth and energyconsumption is bidirectional, thus making a case for the feed- back hypothesis. However, we cannot report any statistically significant evidence that renewable energyconsumption, in particular, is conducive to economicgrowth, a fact that weakens the argument that renewable energyconsumption is able to promote growth in a more efficient and environmentally sustainable way. Finally, in analysing the case for an inverted U-shaped EKC, we find that the continued process of growth aggravates the greenhouse gas emissions phenomenon. In this regard, we cannot provide any evidence that developed countries may actually grow-out of envi- ronmental pollution. In the light of these findings, the efficacy of recent government policies in various countries to promote renewable energyconsumption as a means for sustainable growth is questioned. Put differently, there seems to be an ethical dilemma, between high economicgrowth rates and unsustainable environment and low or zero economicgrowth and environmental sustainability.
This article extends the recent findings of Liu (2005), Ang (2007), Apergis et al. (2009) and Payne (2010) by implementing recent bootstrap panel unit root tests and cointegration techniques to investigate the relationship between carbon dioxide emissions, energyconsumption, and real GDP for 12 Middle East and North African Countries (MENA) over the period 1981–2005. Our results show that in the long-run energyconsumption has a positive significant impact on CO2emissions. More interestingly, we show that real GDP exhibits a quadratic relationship with CO2emissions for the region as a whole. However, although the estimated long-run coefficients of income and its square satisfy the EKC hypothesis in most studied countries, the turning points are very low in some cases and very high in other cases, hence providing poor evidence in support of the EKC hypothesis. Thus, our findings suggest that not all MENA countries need to sacrifice economicgrowth to decrease their emission levels as they may achieve CO2emissions reduction via energy conservation without negative long-run effects on economicgrowth.
The results of error correction model, reported in Table-5, reveal that economicgrowth is linked positively with energyemissions. We find 0.68 percent rise in energyemissionsfrom a 1 percent increase in economicgrowth, on average, ceteris paribus, but the long run results are more reassuring. A1 percent increase in financial development is causes 0.026 percent reduction in energyemissions. The results suggest that the average energyemissions rise by 0.97 percent from a 1 percent increase in energy use. The impact of population on energyemissions is negative but insignificant. The sign of coefficient of lagged ECM term is negative and significant at the 1% level. This establishes long run relation among the running variables. The value of lagged ECM term, -0.1066 suggests that changes in energyemissionsfrom short run to long span of time is corrected by 10.66 percent each year in Pakistan.