Causal nexus in industrialization, urbanization, trade openness, and carbon emissions: empirical evidence from OPEC economies

We need a desirable level of sustainable national economic development without environmental degradation. The key objective of this study is to explore the causal nexus in urbanization, industrialization, energy use, national income, international trade, and environmental pollution by carbon dioxide (CO2) emissions in the six-member countries from the OPEC (Organization of the Petroleum Exporting Countries) over the period 1975–2018. This study is based on the modified empirical model of Kaya Identity introduced by Kaya (Impact of carbon dioxide emission control on GNP growth: interpretation of proposed scenarios, Intergovernmental Panel on Climate Change/Response Strategies Working Group, 1989). After checking the data for stationarity properties, we employed a fixed-effects estimator prefers by the Hausman test. We, in addition, employed the method of robust least squares to confirm the estimates. The empirical estimates reveal that regressors namely urbanization, industrialization, international trade, and energy use increase environmental pollution, while the impacts of income found are opposite. The Granger causality test exhibits a bidirectional causality among national income and CO2, urbanization and CO2, energy use and urbanization national income and urbanization, national income and industrialization, urbanization and industrialization, and exports and urbanization. These findings advise that the management authorities of OPEC countries need to adopt environmentally friendly policies, while regulating environmental pollution to accomplish sustainable economic development in the region. Graphical abstract Source: Compiled by authors from the present entire study