The Effect of Energy Consumption and Economic Growth on Environmental Sustainability in the GCC Countries: Does Financial Development Matter?

Hala Baydoun and Mehmet Aga
Additional contact information
Hala Baydoun: Department of Accounting and Finance, Faculty of Economics and Administrative Sciences, Cyprus International University, North Cyprus, Mersin 10, Haspolat 99040, Turkey
Mehmet Aga: Department of Accounting and Finance, Faculty of Economics and Administrative Sciences, Cyprus International University, North Cyprus, Mersin 10, Haspolat 99040, Turkey

Energies, 2021, vol. 14, issue 18, 1-17

Abstract: Achieving environmental sustainability whilst minimizing the climate change effect has become a global endeavor. Hence, this study examined the effect of energy consumption, economic growth, financial development, and globalization on CO 2 emissions in the Gulf Cooperation Council (GCC) countries. The research utilized a dataset stretching from 1995 to 2018. In a bid to investigate these associations, the study applied cross-sectional dependence (CSD), slope heterogeneity (SH), Pesaran unit root, Westerlund cointegration, cross-sectionally augmented autoregressive distributed lag (CS-ARDL), and Dumitrescu and Hurlin (DH) causality approaches. The outcomes of the CSD and SH tests indicated that using the first-generation techniques produces misleading results. The panel unit root analysis unveiled that the series are I (1). Furthermore, the outcomes of the cointegration test revealed a long-run association between CO 2 emissions and the regressors, suggesting evidence of cointegration. The findings of the CS-ARDL showed that economic growth and energy consumption decrease environmental sustainability, while globalization improves it. The study also validated the environmental Kuznets curve (EKC) hypothesis for GCC economies. In addition, the results of the DH causality test demonstrated a feedback causality association between economic growth and CO 2 emissions and between financial development and CO 2 emissions. Moreover, there is a one-way causality from energy consumption and globalization to CO 2 emissions in GCC economies. According to the findings, environmental pollution in GCC countries is output-driven, which means that it is determined by the amount of energy generated and consumed.

Keywords: CO 2 emissions; economic growth; energy consumption; environmental sustainability; financial development; globalization (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://www.mdpi.com/1996-1073/14/18/5897/pdf (application/pdf)
https://www.mdpi.com/1996-1073/14/18/5897/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jeners:v:14:y:2021:i:18:p:5897-:d:637666

Access Statistics for this article

Energies is currently edited by Ms. Agatha Cao

More articles in Energies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().