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What is MENA Region Initially Needed: Grow Output or Mitigate CO2 Emissions?

Sahbi Farhani, Muhammad Shahbaz () and Rashid Sbia ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the question: ‘What is Middle East and North Africa (MENA) region initially needed: grow output or mitigate CO2 emissions? This question is a focus on the issue of both production function and environmental function based on the environmental Kuznets curve (EKC) approach. Adopting a new analytical framework, the empirical study parallels two approaches: i) First one follows the studies of Lean and Smyth (2010a) and Sadorsky (2012) which examine the dynamic interaction of energy consumption and trade openness using production function; ii) Second one extends the recent works of Halicioglu (2009), and Jayanthakumaran et al. (2012) which attempt to introduce energy consumption and trade openness in the environmental function as a mean to circumvent omitted variable bias. For nine MENA countries over the period 1990-2011, the empirical results appear to be relevant in light of the growing literature on the cointegration and causal relationships. Policy implications for a better environment indicate that MENA countries should adopt policies to control the increase of pollution as well as to stabilize the productivity growth. One of these policies consists to facilitate the role of energy use by increasing the share of renewable energy relative to non-renewable energy sources.

Keywords: Growth; Energy; CO2 Emissions; MENA (search for similar items in EconPapers)
JEL-codes: O1 (search for similar items in EconPapers)
Date: 2013-08-04, Revised 2013-08-05
New Economics Papers: this item is included in nep-ara, nep-ene and nep-env
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