Asymmetric Effect of Green Energy and Economic Growth on the Environmental Deterioration and the Environmental Kuznets Curve Validation in MENA Countries

Mohammad Jibran Gul Wani, Ibrahim Abdou Alamir, Musa Ghazwani, Irfan Ahmed, Fadi Alkaraan and Mohammad Ahsan Khan

International Journal of Finance & Economics, 2025, vol. 30, issue 4, 3553-3568

Abstract: This study aims at investigating the contextual factors surrounding the nexus between economic development and environmental degradation by utilising the Environmental Kuznets Curve (EKC) hypothesis and incorporating CO2 emissions indicator. The environmental quality, energy source, economic growth nexus evaluation is heavily dependent on the level of economic growth. The study examines impact of different levels of economic expansion following an Environmental Kuznets Curve (EKC) hypothesis across Middle East and North Africa (MENA). Additionally, the present study examines the asymmetrical relationship that exist between economic growth and green energy, and the environmental quality. The study employs panel data ranging from 1996 to 2020 in the context of MENA nations. Several econometric tests were employed, second generation unit root tests, CIPS and CADF, Westerlund cointegration test. This study extends prior studies by applying the Panel Non‐Linear Autoregressive Distributed Lag (PNARDL). The Westerlund test validates a long run association among the variable of the study. The EKC hypothesis is validated in the short run for the MENA countries. It also reveals that a positive and negative shocks to the green energy decreases CO2 emissions. The positive shock to GDP results in an increase in CO2 emissions. Moreover, the study revealed a negative and significant relationship between FDI and CO2 emission. A positive and significant relationship was found between trade openness and CO2 emissions. Our findings suggest that the MENA nations should switch to green energy sources to lessen the impact of non‐renewable energy consumption on the environment and promote sustainable development, since non‐renewable energy is believed to have the greatest impact on economic activity.

Date: 2025
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