Does the inflow of remittances and energy consumption increase CO2 emissions in the era of globalization? A global perspective

Abstract

In recent decades, remittances inflow has become a major source of capital which has multidimensional consequences on various economic indicators and potentially associated with CO2 emissions. This study investigates the impact of remittances, energy use, and globalization on CO2 emissions using a global sample of 97 countries during 1990-2016. Our findings based on robust system GMM indicate that remittances and energy use increases CO2 emissions, however, globalization reduces CO2 emissions. To capture the national difference, this study divides the global sample into two sub-samples: first comprised of developed countries and second developing and emerging countries. Interestingly our findings are similar in both sub-samples. Further, our results are robust to various robustness checks, which ensures the reliability of our findings. Based on our results, we suggest governments, regulators and other stakeholders to mitigate the adverse impact of remittances and energy use on environmental quality by strict market regulations and monitoring, allocating substantial financial resource to research and development for innovating environmental friendly production technologies and renewable energy sources and by giving incentives i.e tax rebates and subsidies on imports of environment-friendly production technology from the advanced countries. Lastly, considering the negative impact of globalization on CO2 emissions, governments can use globalization as a tool to reduce CO2 emissions and promote environmental quality.