Management of Environmental Performance and Impact of the Carbon Dioxide Emissions (CO2) on the Economic Growth in the GCC Countries

Abstract

This paper summarizes the arguments and counterarguments within the scientific discussion on the issue the Management of Environmental Performance and the Carbon Dioxide Emissions (CO2) on the Economic Growth, with an innovative study in the context of the GCC countries. The main goal of the paper is to examine empirically the environmental Kuznets curve hypothesis for the GCC countries. The methodological tool of this contribution tries to measure the effect of the emission of the CO2 on the Growth Economic and environmental performance. The main purpose of the research is focused on the empirical approach justified by the use of a dynamic panel modeling on a sample of the GCC countries during the period of 2002-2018. Systematization literary sources and approaches for solving the problem of the reaction of the development of the Environmental Performance with the level of the the Carbon Dioxide Emissions (CO2) and the economic growth. The study employed a GMM model system. Subsequently, the authors displayed a Panel Co-integration test of Pedroni (2004), the Kao Residual Co-integration test (1999), and the Granger causality tests. The results found unidirectional causal relationships between economic growth and the entire variable of the sample, except the variable CO2 emission. These relationships are statistically significant at the level of 5%. For the relation between Economic Growth and CO2 emission, one the hypothesis of the paper was checking a non-significant and unidirectional relationship. The results showed a long-run unidirectional causality between the variables and implied that Economic Growth in the GCC countries has a positive and significant unidirectional relation with Environment Performance, trade openness, foreign direct investment, and investment. The results confirm the existence of a negative relationship as insignificant, and unidirectional, between economic growth and CO2 emissions in the GCC countries. Finally, this finding doesn’t support the validity of the EKC hypothesis and provide information's to take the necessary policy suggestions to maintain the environmental performance and limit the average of the CO2 emissions. The results of the research can be useful for the GCC countries to avoid the higher level of Carbon Dioxide Emissions (CO2) and maintain a good Environmental Performance. Keywords: environmental performance, Environmental Kuznets Curve, CO2 emissions.