Examining the Existence of a Modified Environmental Kuznets Curve for the Middle East and North Africa Economies

Abstract

Most of the environment-income relationship literature uses the Environmental Kuznets Curve (EKC) approach to study the impact of income growth on environment degradation. However, a more realistic approach should discuss the relationship in terms of development rather than merely income growth. To reflect the development dimension, this research examines the existence of the EKC relationship between CO2 emissions per capita and Human Development Index in the MENA economies for the period 2004-2013; in what is officially known by the name of Modified EKC (MEKC). Using Least Square Fixed Effects specification, the empirical results indicate the existence of MEKC for the MENA region economies. In addition, empirical results support the significance of controlling corruption on decreasing CO2 emissions. A Granger causality test on the direction of the relationship between corruption and CO2 emissions per capita is examined. The results of the Granger causality test confirm the presence of a unidirectional relationship between CO2 emissions per capita and corruption. Arguing on the basis of MKEC, the empirical results show that reducing corruption can be an important factor in improving the environmental quality as well as effectively mitigate climate change in the MENA region.

 

Keywords: Granger causality test, corruption, climate change, MEKC, mitigation.