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The impact of CO2 emissions on economic growth: evidence from selected higher CO2 emissions economies

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Abstract

The main purpose of this work is to analyze the impact of environmental degradation proxied by CO2 emissions per capita along with some other explanatory variables namely energy use, trade, and human capital on economic growth in selected higher CO2 emissions economies namely China, the USA, India, and Japan. For empirical analysis, annual data over the period spanning between 1971 and 2013 are used. After using relevant and suitable tests for checking data properties, the panel fully modified ordinary least squares (FMOLS) method is employed as an analytical technique for parameter estimation. The panel group FMOLS results reveal that almost all variables are statistically significant, whereby test rejects the null hypotheses of non cointegration, demonstrating that all variables play an important role in affecting the economic growth role across countries. Where two regressors namely CO2 emissions and energy use show significantly negative impacts on economic growth, for trade and human capital, they tend to show the significantly positive impact on economic growth. However, for the individual analysis across countries, the panel estimate suggests that CO2 emissions have a significant positive relationship with economic growth for China, Japan, and the USA, while it is found significantly negative in case of India. The empirical findings of the study suggest that appropriate and prudent policies are required in order to control pollution emerging from areas other than liquefied fuel consumption. The ultimate impact of shrinking pollution will help in supporting sustainable economic growth and maturation as well as largely improve society welfare.

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Notes

  1. Auci and Trovato (2011).

  2. Trends in global CO2 emissions—2014 report by Olivier et al. (2014)

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Authors and Affiliations

  1. School of Economics, Finance & Banking, College of Business, Universiti Utara Malaysia, Kedah, Malaysia

    Muhammad Azam & Hussin Bin Abdullah

  2. Department of Management Sciences, Abdul Wali Khan University Mardan, Mardan, KP, Pakistan

    Muhammad Azam

  3. Department of Management Sciences, COMSATS Institute of Information Technology, Wah Cantt Campus, Islamabad, Pakistan

    Abdul Qayyum Khan

  4. APCOMS, University of Engineering and Technology, Taxila, Pakistan

    Muhammad Ejaz Qureshi

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  1. Muhammad Azam
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  2. Abdul Qayyum Khan
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  3. Hussin Bin Abdullah
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  4. Muhammad Ejaz Qureshi
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Correspondence to Muhammad Azam.

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Azam, M., Khan, A.Q., Abdullah, H.B. et al. The impact of CO2 emissions on economic growth: evidence from selected higher CO2 emissions economies. Environ Sci Pollut Res 23, 6376–6389 (2016). https://doi.org/10.1007/s11356-015-5817-4

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