An Empirical Investigation of the Relationship between Economic Growth, Urbanization, Energy Consumption, and CO2 Emission in GCC Countries: A Panel Data Analysis

Mohammad Asif,Raj Bahadur Sharma,Anass Hamad Elneel Adow

doi:10.5539/ass.v11n21p270

Abstract

The faster growing energy consumption and urbanization are supporting economic growth but are contributing in the environmental degradation. The existing empirical literature has been remained silent on this serious issue in case of GCC countries. The present study captures these rectangular relationships amongst these variables in the GCC countries by using panel unit root and cointegration tests for a period 1980-2011. The study finds the first difference stationarity and existence of cointegration among the concerned variables. Further, urbanization has the positive impact on CO 2 , energy consumption and economic growth. Economic growth has a positive impact on CO 2 and has a negative impact on energy consumption. Energy consumption has a positive impact on CO 2 and CO 2 has a positive impact on energy consumption and economic growth. The causality tests also confirm the direction of relationships in the most of GCC countries in the country-specific analysis. The results of the study suggest the urban planning and clean energy consumption to avoid the pollutant emissions and to achieve sustainable development for GCC countries in the long run.

Highlights

The Gulf Co-operation Council (GCC) (Note 1) countries are one of the world’s most urbanized economic regions in the world
The present study attempted to address the following significant questions as well First, how are urbanization, energy consumption and carbon emissions are interrelated? Second, how far emissions can be explained by factors like urbanization and economic growth? Third, assuming that urbanization and high energy consumption contribute to carbon emission, what policy measures could be recommended for these economies? So far many studies have examined the energy-growth relationship in case of GCC countries but there are very limited study that has examined the relationship amongst energy consumption urbanization and carbon emission www.ccsenet.org/ass
Interpreting the coefficients individually, the results indicate that given the small size of economies like Bahrain, Oman and United Arab Emirate (UAE), a 1% increase in urbanization leads to 0.72%, 0.41% and more than 1.24% increase in economic growth of Bahrain, Oman and UAE, respectively

Summary

Introduction

The Gulf Co-operation Council (GCC) (Note 1) countries are one of the world’s most urbanized economic regions in the world. The high growth rate of population in some of the GCC countries like Saudi Arabia and Oman have forced these economies to undertake prudent urban development measures to revive the infrastructure facilities in the existing cities. It is noteworthy that due to welfare oriented concentrated development in most of the GCC countries, it is expected that this region will be able to achieve The Arab Millennium Development Goals (MDGs) Despite these rosy economic scenarios, there is increasing concern that the high rate of consumption of energy is expected to aggravate the problem of environmental degradation in GCC. As the recent Figures of average energy consumption in GCC indicate that there is increasing trend in energy consumption and CO2 emission This realization has prompted us to probe the cumulative influence of population explosion, energy consumption, and urbanization on CO2 emanation.

Objectives

Results

Conclusion