Foreign trade, financial development, agriculture, energy consumption and CO₂ emission: testing EKC among emerging economies

Abstract

Purpose The main purpose of this study is to explore the presence of the EKC hypothesis in emerging economies. Additionally, the present study also explores the existence of the “resource curse hypothesis” (RCH), and the causal relationship among the variables that are considered for testing the presence of EKC and RCH hypothesis for a panel of selected emerging economies for the time period between 1990 and 2014. Design/methodology/approach The authors performed unit root test followed by cointegration test to test the existence of cointegrating relationship among the variables. Dynamic ordinary least square (DOLS) and fully modified ordinary least square (FMOLS) methods are used to obtain long-run estimates of considered variables, and the Granger causality test is performed to test the directional causality. Findings The long-run estimates obtained from DOLS and FMOLS techniques support the presence of the EKC (inverted U-shape) and the RCH. Originality/value To the best of the authors’ knowledge, the present work is the pioneer study for EKC and RCH investigation in the context of emerging economies. The policy implication is that these economies should look forward to drafting new policies to reduce environmental degradation and promote sustainable development.

Time-varying impact of financial development on carbon emissions in G-7 countries: Evidence from the long history

“…For instance, Ozturk and Acaravci (2013) find that financial development has no significant effect on CO 2 emissions in the case of Turkey. Using the case of 12 emerging economies, Koshta et al (2020) explore the causal relationship between CO 2 emissions, GDP, financial development, agriculture value-added, foreign trade, and renewable and nonrenewable energy consumption for the period 1990 to 2014; they find that financial development does not have a statistically significant impact on CO 2 emission. Similarly, according to Acheampong et al (2020), Bekhet et al (2017), Charfeddine and Khediri (2016), Omri et al (2014), and Tamazian and Rao (2010), there is no significant relationship between financial development and CO 2 emissions.…”

Modeling the Dynamic Linkages between Agriculture, Electricity Consumption, Income and Pollutant Emissions for Southeastern Europe

“…The EKC phenomenon proposes that there exists an inverted U-shaped relationship between pollutant emissions and economic output (growth/ income). This concept has attracted the attention of the academic world [2][3][4][5][6][7][8][9][10][11][12][13] and argues that, in the first stage of economic emancipation, environmental damage increases as income increases, while environmental degradation starts to dwindle in the latter stages of growth. In other words, the EKC phenomenon suggests that economic growth will irrevocably disentangle and/ or reconsider the unfavorable environmental effect triggered in the first stage of economic growth.…”

“…The article findings report significant positive impact of economic growth, non-renewable energy and agriculture on pollutant emissions but negative impact of squared economic growth and renewable energy. Recent studies [8][9][10][11][12][13][14] show that income, energy consumption and agriculture are important determinants of environmental degradation. However, the empirical research findings vary and fail to clarify the background and policy implications.…”

Financial Inclusion and CO2 Emissions in Asia: Implications for Environmental Sustainability

“…Hence, it is evident that the development of the nancial sector, which shows the real availability of capital and funding channels through banks and stock markets, can positively contribute to environmental sustainability via the reduction of GHG emissions (Gök, 2020). From this perspective, nancial development reduces environmental deterioration (Koshta et al, 2020). Several empirical studies acknowledge the positive role of nancial development in combating climate change (Charfeddine and Kahia, 2019;Omri et al, 2015;Shahbaz et al, 2013;Tamazian and Rao, 2010).…”

“…Firstly, a well-functioning nancial system lowers the cost of borrowing, which encourages businesses to obtain the capital required to expand production, which in turn increases CO2 emissions (Raghutla and Chittedi, 2020). Secondly, nancial development dramatically promotes social consumption thereby providing better credit utilization, which could facilitate individual consumers purchasing more energy intensive goods such as electrical appliances (Gök, 2020), automobiles and many others, which in turn increases CO2 emissions (Koshta et al, 2020). Thirdly, capital markets are considered important indicators of economic development.…”