Exploring the relationships among CO2 emissions, urbanization, economic growth, economic structure, energy consumption, and trade along the BRI based on income classification

Abstract

The Belt and Road Initiative offers interaction among beneficiary countries that fosters economic cooperation spanning education, energy consumption, economic development, environmental change, and quality of life. Of these benefits, carbon dioxide emissions generated by economic growth and related environmental changes have garnered great attention. This paper empirically studies the causal relationships among urbanization, economic growth, energy consumption, economic structure, trade, and carbon dioxide emissions according to an income classification of the Belt and Road Initiative countries. The results from the Westerlund bootstrap cointegration test indicate long-run associations among the variables under study. Estimation from the common correlated effect mean group indicates that a percentage increase in urbanization increases emissions of CO2 by 1.1533% and 1.0454% in lower middle-income and low-income countries, respectively. The elasticity of energy consumption with emissions is higher in low-income countries than in countries in the other three classifications. The Dumitrescu–Hurlin causality test shows a bidirectional causal effect between gross domestic product and emissions in lower middle-, upper middle-, and low-income countries. A bidirectional association was found between urbanization and carbon emissions in low- and lower middle-income countries. These methods take cross-sectional correlations into account in their estimation; hence, some important policy implications can be drawn from the empirical results.