Non-linear nexus between CO2 emissions and economic growth: A comparison of OECD and B&R countries

Abstract

Recognizing the recent pace of globalization and greenhouse gas emissions growth, this study compares the dynamic nexus amid carbon emissions, trade, energy usage, urbanization and growh output over the period 1992–2015. For policy perspective, the observed sample of countries are grouped into two sub-panels namely; Belt and Road (B&R), and Organization for Economic Co-operation and Development (OECD) countries. The panel unit root and cointegration outcomes show the evidence of stationarity and equilibrium relationship for all three panels in the long-term, respectively. The Environmental Kuznets Curve (EKC) assumption is confirmed in the three panels. Our outcomes from the Common Correlated Effect Mean Group (CCEMG) and Augmented Mean Group (AMG) methods consistently indicated that growth output has significant postive effect on evironmental pollution for all panels. The outcome further demonstrates that other factors such as trade openness, urbanization and energy usage have been responsible for the recent increase in carbon emissions globally. However, there are disparities per the estimated coefficients. The impact is greater within the OECD region than the Belt and Road region. The Granger non-causality estimates show the proof of a two-way causal relationship between output, energy usage, trade openness and urbanization on carbon emission for all three panels in the long-term. Efforts to promote a low-carbon and sustainable green environment therefore should jointly consider these factors during policy development.