Economic Growth and Carbon Dioxide Emissions in East African Countries: A Pooled Mean Group Approach
Year: 2020
Type: article
Abstract: In recent years, due to factors such as increases in greenhouse gas (GHG) and carbon dioxide (CO2) emissions, global warming and climate changes has become a major threat for all countries. However, contrary to the deep-seated belief that human impact on the environment is negative and progressive, recent empirical research shows that certain types of pollutants follow an inverted-U shape or Environmental Kuznets curve (EKC), as income grows. The EKC hypothesis postulates that environmental degradation (pollution) increases up to a certain level, as income goes up; after that, it decreases. Thus, using the EKC hypothesis as a theoretical framework and applying Pooled Mean Group (PMG) approach, this paper examines the nexus between CO2 emissions, economic growth, Foreign Direct Investment (FDI) and total population. The study uses panel data of 12 East African countries over the period 1981–2016. Our empirical result shows that there exists a monotonically increasing relationship between CO2 emissions and economic growth both in the short-run and long-run, contrary to what is claimed by the EKC hypothesis. Moreover, per capita CO2 emissions increase positively with respect to FDI and total population in the long-run. The result of the study also reports the existence of unidirectional causalities running from per capita GDP, FDI and total population to per capita CO2 emissions in the long-run, while unidirectional short-run causalities was observed from GDP and FDI to CO2 emissions, without any feedback effects. Therefore, these unidirectional causalities imply that CO2 emission reduction or abatement measures can be implemented without having any adverse effect on the real output growth or economic growth, in East Africa.
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W3033130481