Toward a green economy: The nexus between economic and environmental factors in MENA countries, ARDL bounds approach

Abstract

AbstractWith the transition of the global economy toward a green economy, it is important to analyze the elements that can either support or impede this transformation. Therefore, in this study, we aimed to evaluate the potential of the green economy in the Middle East and North Africa (MENA) countries by analyzing the correlation between economic and environmental factors. The objective of this study is to explore the potential of the green economy in MENA countries by analyzing key factors such as access to clean fuel, GDP, and CO2 emissions. The study aims to distinguish between long‐ and short‐term effects, assess the presence of a long‐run relationship or co‐integration between the parameter estimates, and evaluate the progress of MENA countries toward a green economy based on the impact of economic, and environmental factors. Using quarterly and seasonally adjusted data from 2000 to 2018, the auto‐regressive distributed lag (ARDL) technique was employed to examine the co‐integration of the factors in the long and short terms. Multiple cointegration techniques were also used to determine the feasibility of a green economy by analyzing the relationship between access to clean fuel for technology and cooking, GDP, and CO2 emissions. The study's findings indicate a clear long‐ and short‐term relationship between the analyzed factors, as confirmed by the error correction model (ECM) which suggests that the variables are cointegrated and potentially relevant. Additionally, the result of the autoregressive distributed lag bound test shows that the green economy variables, GDP, CO2 emissions, and access to clean fuel, are cointegrated in the long‐term.