Culture, income, and CO2 emission

Abstract

Given the devastating effects of global warming, the problem of human-induced climate change, and in particular carbon dioxide emissions, has been high on the global policy agenda. In this study, we examine the relationship between national culture, carbon dioxide emissions, and economic growth in the framework of the Environmental Kuznets Curve (EKC). Applying system GMM panel estimator across 69 developed and developing countries, we confirm the existence of EKC and show that culture significantly affects the income-emission relationship. Moreover, the effects of the six cultural dimensions on EKC can be collapsed into two: (i) masculinity, power distance and indulgence move the EKC upward and shift the income turning point to the left; and (ii) individualism, uncertainty, and long-term orientation move the EKC downward while shifting the income turning point to the right. The impact of culture on EKC remains also robust for alternative specifications. Future policy and global initiatives in sustainable development should incorporate the multidimensional impact of culture on national behavior towards environment and economic growth, a relationship that has been largely ignored in economic decision-making models.