An Empirical Analysis of the Environmental Kuznets Curve: the Case of Cameroon

Abstract

This study investigates the association between financial development, trade openness, economic growth (GDP), and environmental quality (CO2) in Cameroon from 1980-2016. To examine the relevance of the Environmental Kuznets Curve (EKC), the squared of GDP is included in the model. The Johansen-Juselius co-integration tests demonstrate that a robust long-run relationship exists between the variables. Specifically, GDP influences carbon dioxide emissions negatively, while GDP squares positively. The Granger causality tests further indicate that the GDP and GDP squared caused CO2 emissions uni-directionally in the short-run with no feedback. The findings settled that the EKC, with a U-shape relationship, is relevant in Cameroon. Therefore, it is recommended that the government focus on implementing policies that raise growth with minimal emissions of pollution.