Academic journal article Asian Social Science

An Empirical Investigation of the Relationship between Economic Growth, Urbanization, Energy Consumption, and CO2 Emission in GCC Countries: A Panel Data Analysis

Academic journal article Asian Social Science

An Empirical Investigation of the Relationship between Economic Growth, Urbanization, Energy Consumption, and CO2 Emission in GCC Countries: A Panel Data Analysis

Article excerpt


The faster growing energy consumption and urbanization are supporting economic growth but are contributing in the environmental degradation. The existing empirical literature has been remained silent on this serious issue in case of GCC countries. The present study captures these rectangular relationships amongst these variables in the GCC countries by using panel unit root and cointegration tests for a period 1980-2011. The study finds the first difference stationarity and existence of cointegration among the concerned variables. Further, urbanization has the positive impact on CO2, energy consumption and economic growth. Economic growth has a positive impact on CO2 and has a negative impact on energy consumption. Energy consumption has a positive impact on CO2 and CO2 has a positive impact on energy consumption and economic growth. The causality tests also confirm the direction of relationships in the most of GCC countries in the country-specific analysis. The results of the study suggest the urban planning and clean energy consumption to avoid the pollutant emissions and to achieve sustainable development for GCC countries in the long run.

Keywords: carbon dioxide emission, energy consumption, economic growth, urbanization

(ProQuest: ... denotes formulae omitted.)

1. Introduction

The Gulf Co-operation Council (GCC) (Note 1) countries are one of the world's most urbanized economic regions in the world. According to a Qatar National Bank (QNB) study, the GCC gross domestic product (GDP) is predicted to reach $ 1.5 trillion in 2013, and on average its per capita income was as high as US $19,800 in 2008 (Note 2). Consequently, the region has witnessed strong surge in urbanization process with the use of all modern amenities and modern life style enjoyed by its citizens. The average urbanization rate is more than 70% and countries like Kuwait and Qatar are 100% urbanized (UN Habitat, 2012). According to UN (Habitat, 2012), GCC countries are home of about 39 million population of which around 67% live in Saudi Arabia. The possible explanations of rapid growth of urbanization in GCC are internal migration and huge inflow of expatriate workers coming mainly from neighbouring and South Asian region. The high growth rate of population in some of the GCC countries like Saudi Arabia and Oman have also forced these economies to undertake prudent urban development measures to revive the infrastructure facilities in the existing cities. It is noteworthy that due to welfare oriented concentrated development in most of the GCC countries, it is expected that this region will be able to achieve The Arab Millennium Development Goals (MDGs). Despite these rosy economic scenarios, there is increasing concern that the high rate of consumption of energy is expected to aggravate the problem of environmental degradation in GCC. As the recent Figures of average energy consumption in GCC indicate that there is increasing trend in energy consumption and CO2 emission. This realization has prompted us to probe the cumulative influence of population explosion, energy consumption, and urbanization on CO2 emanation. Subsequently, the present study attempted to address the following significant questions as well First, how are urbanization, energy consumption and carbon emissions are interrelated? Second, how far emissions can be explained by factors like urbanization and economic growth? Third, assuming that urbanization and high energy consumption contribute to carbon emission, what policy measures could be recommended for these economies? So far many studies have examined the energy-growth relationship in case of GCC countries but there are very limited study that has examined the relationship amongst energy consumption urbanization and carbon emission in the context of GCC. The incorporation of macroeconomic variables like economic growth, population growth and urbanisation help in finding out the relationship more robustly. …

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