Income Level and Environmental Quality in The MENA Countries: Discussing the Environmental Kuznets Curve Hypothesis

Hatem M'Henni, Mohamed Arouri, Adel Ben Youssef and Christophe Rault

No 587, Working Papers from Economic Research Forum

Abstract: This study extends the recent works of Liu (2005), Ang (2007), Apergis et al. (2009) and Payne (2010) by implementing recent bootstrap panel unit root tests and co-integration techniques to investigate the relationship between carbon dioxide emissions, energy consumption, and real GDP for 12 MENA countries over the period 1981–2005. Our results show that in the long-run energy consumption has a positive significant impact on CO2 emissions. More interestingly, we show that real GDP exhibits a quadratic relationship with CO2 emissions 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 (except Tunisia, Morocco and UAE), the EKC turning points are very low in some cases and very high in the other cases, hence providing poor evidence in support of the EKC hypothesis (except for Jordan). Thus, our findings suggest that not all MENA countries need to sacrifice economic growth to decrease their emission levels as they may achieve CO2 emissions reduction via energy conservation without negative long run effects on economic growth.

Pages: 33
Date: 2011-01-05, Revised 2011-01-05
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