Transition to sustainable environment and economic growth in Tunisia: An ARDL approach

Abstract

This study investigates the relationship between environmental sustainability and economic growth in Tunisia by employing the Autoregressive Distributed Lag (ARDL) approach, Principal Component Analysis (PCA), and Granger Causality on annual data from 1990 to 2022. It aims to understand how environmental sustainability influences Tunisia's economic growth, revealing a substantial positive long-term association. The research is crucial in the global discourse on sustainability, providing insights for informed policy-making and sustainable development, particularly in developing nations like Tunisia. By utilizing the PCA, the ARDL approach, and Granger causality, the analysis gains robustness, offering a comprehensive understanding of the complex relationship. The originality lies in its Tunisia-specific focus, contributing perspectives to the broader conversation on environmental sustainability and economic growth. Notably, we identify a positive long-term impact of environmental sustainability on Tunisia's economic growth, with implications for policymakers, economists, and environmental advocates. The robustness of the results to different proxies reinforces the credibility and applicability of the findings, advancing both academic understanding and providing actionable insights for policymakers aiming to balance economic prosperity and environmental sustainability in Tunisia and similar developing economies. A green economy model mut be embraced in Tunisia, that meets economic and environmental goals, particularly decarbonization through energy security, creating quality jobs through trade openness and FDI, promoting entrepreneurship and technology start-ups.