Variance Decomposition of Emissions, FDI, Growth and Imports in GCC countries: A Macroeconomic Analysis

Ahmed Saddam

doi:10.18775/ijmsba.1849-5664-5419.2014.16.1010

Abstract

This paper provides an empirical evidence of the variance decomposition of carbon dioxide emissions, FDI inflows, GDP per capita and imports in GCC countries; UAE, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait. The method adopted is based on the Vector Error Correction Model (VECM). It examined a 256 observation for the duration 2000 – 2010. We found that FDI inflows have a significant variance to GDP. And the increase of level of carbon dioxide emissions is highly related to FDI and commodity imports in which GCC economies have not taken into account in their environmental consideration. The study is valuable for organizations and government policy-makers given that the importance of industry engagement for organizational outcomes has been confirmed. Correspondingly, significant implications for organizations exist, as they are aware of which parts of their operations and conditions will drive relevant talent to engage in the organizations’ work. This paper provides an empirical evidence of the variance decomposition of carbon dioxide emissions, FDI inflows, GDP per capita and imports in GCC countries; UAE, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait. The method adopted is based on the Vector Error Correction Model (VECM). It examined a 256 observation for the duration 2000 – 2010. We found that FDI inflows have a significant variance to GDP. And the increase of level of carbon dioxide emissions is highly related to FDI and commodity imports in which GCC economies have not taken into account in their environmental consideration. This paper provides an empirical evidence of the variance decomposition of carbon dioxide emissions, FDI inflows, GDP per capita and imports in GCC countries; UAE, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait. The method adopted is based on the Vector Error Correction Model (VECM). It examined a 256 observation for the duration 2000 – 2010. We found that FDI inflows have a significant variance to GDP. And the increase of level of carbon dioxide emissions is highly related to FDI and commodity imports in which GCC economies have not taken into account in their environmental consideration.

Highlights

IntroductionThe first one, the pollution haven hypothesis (PHH) suggests that developed countries impose strict environmental policies and distort the existing pattern of comparative advantage when the polluting industries shift their operations from the developed to the developing countries to become “Pollution Haven”
Two conflicting hypotheses have emerged from the debate about the environment
FDI inflows have a significant linkage with GDP in comparison to Co2 and M

Summary

Introduction

The first one, the pollution haven hypothesis (PHH) suggests that developed countries impose strict environmental policies and distort the existing pattern of comparative advantage when the polluting industries shift their operations from the developed to the developing countries to become “Pollution Haven”. The second is the factor endowment hypothesis (FEH) which assumes that trade liberalization will lead to consistency of trade pattern. This notion is based on the Heckscher-OhlinVanek (HOV) theory of comparative advantage and consists of factor endowment differentials (Saddam 2014). Factor endowment theories of international trade predict that developed countries specialize in polluting goods. This means that PHH is in direct conflict with the FEH.

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Conclusion