Abstract
This study explored the long-run association among greenhouse gases (GHGs), financial development, forest area, improved sanitation, renewable energy, urbanization, and trade in 24 lower middle-income countries from Asia, Europe, Africa, and America (South and North) by using panel data from 1990 to 2015. Granger causality was tested by Toda and Yamamoto approach. The bi-directional causality was established among urbanization and GHGs (Asia), financial development and forest (Asia), energy use and renewable energy (Asia), renewable energy and forest (Asia), improved sanitation and forest (Asia, Africa, America), urbanization and forest (Asia), and improved sanitation and financial development (Europe). The GHG emission also shows one-way causality is running from financial development to GHG (America), energy to GHG (Asia), renewable energy to GHG (America), forest area to GHG (America), trade openness to GHG (Africa), urbanization to GHG (Europe), GHG to financial development (Europe), GHG to energy use (Europe, Africa, and America), and GHG to trade openness (Asia). On the basis of fully modified ordinary least square and generalized method of moment, the reciprocal relationship of GHGs was observed due to financial development in Asia and Africa; renewable energy in all panels; forest area in Asia, Europe, and America; improved sanitation in Asia, Africa, and America; trade openness in Africa; and urbanization in Europe and America. Policymakers should concentrate on these variables for the reduction in GHGs. The annual convergence towards long-run equilibrium was 50.5, 31.9, and 20.9% for America, Asia, and Africa, respectively.
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Abbreviations
- ACD:
-
Asia Cooperation Dialogue
- AIC:
-
Akaike information criterion
- ARDL:
-
Auto-regressive distributed lag
- CCR:
-
Canonical cointegrating regression
- CO2 :
-
Carbon dioxide
- DOLS:
-
Dynamic ordinary least square
- ECM:
-
Error correction model
- FMOLS:
-
Fully modified ordinary least square
- GCC:
-
Gulf Cooperation Council
- GDP:
-
Gross domestic product
- GHG:
-
Greenhouse gas emission
- GLM:
-
Generalized linear model
- GMM:
-
Generalized method of moments
- HICs:
-
High-income countries
- ICTSD:
-
International Centre for Trade and Sustainable Development
- IPS:
-
Im, Pesaran, and Shin
- ITC:
-
International Trade Centre
- LICs:
-
Low-income countries
- LLC:
-
Levin, Lin, and Chu
- LMICs:
-
Lower middle-income countries
- MENA:
-
The Middle East and North Africa
- MW:
-
Maddala and Wu
- PCA:
-
Principal component analysis
- SDGs:
-
Sustainable Development Goals
- UMICs:
-
Upper middle-income countries
- UN:
-
United Nations
- VAR:
-
Vector auto-regressive
- VECM:
-
Vector error correction model
- WDI:
-
World development indicators
- WEF:
-
World Economic Forum
- WTO:
-
World Trade Organization
- ∆ :
-
Representation of the first difference
- i:
-
Representation of the ith country
- t:
-
Representation of the time period
- α1…α7 :
-
GHG elasticity
- \( {{\widehat{\upbeta}}^{\ast}}_{\mathrm{GFM}} \) :
-
Estimator of FMOLS
- \( {\mathrm{t}}_{{\widehat{\upbeta}}_{\mathrm{GFM}}^{\ast }} \) :
-
T-statistics of FMOLS
- C i,β i,λ i :
-
Estimated parameters of VECM
- A:
-
The weight of the first component of PCA
- B:
-
The weight of the second component of PCA
- C:
-
The weight of the third component of PCA
- BM:
-
Broad money
- DCFS:
-
Domestic credit provided by the financial sector
- DCPS:
-
Domestic credit to the private sector
- EEEs:
-
Economy, environment, and energy
- EG:
-
Economic growth
- EN:
-
Energy consumption
- FD:
-
Financial development
- FDI:
-
Financial development index
- FOR:
-
Forest area
- OPEN:
-
Trade openness
- REN:
-
Renewable energy consumption
- SAN:
-
Improved sanitation
- UR:
-
Urbanization
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Khan, M.T.I., Yaseen, M.R. & Ali, Q. The dependency analysis between energy consumption, sanitation, forest area, financial development, and greenhouse gas: a continent-wise comparison of lower middle-income countries. Environ Sci Pollut Res 25, 24013–24040 (2018). https://doi.org/10.1007/s11356-018-2460-x
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DOI: https://doi.org/10.1007/s11356-018-2460-x