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Environmental pollution effects of economic, financial, and industrial development in OPEC: comparative evidence from the environmental Kuznets curve perspective

Author

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  • Mehmet Demiral

    (Niğde Ömer Halisdemir University)

  • Özkan Haykır

    (Niğde Ömer Halisdemir University)

  • Emine Dilara Aktekin-Gök

    (Niğde Ömer Halisdemir University)

Abstract

Many studies examined the association between gross domestic production (GDP) and environmental pollution to test the inverted U-shaped environmental Kuznets curve (EKC) hypothesis for varied country groups. Although it has useful implications for achieving a climate–neutral world economy, the exploration of the relationship is yet limited for oil-rich economies. On the other hand, the ambiguity of the available EKC evidence addresses the consideration of other pillars of economic development. Therefore, this paper tests the EKC hypothesis comparatively in the separate non-linear effects of financial and industrial development, as well as the traditional GDP-based economic development, on per capita fossil carbon dioxide (CO2) emissions for the Organization of the Petroleum Exporting Countries (OPEC) bloc. Financial development is proxied by the financial institutions development index, industrial development is measured by per capita industry value-added, and traditional economic development is indicated by per capita GDP. The trade, financial, social, and political dimensions of globalization are also incorporated as control variables in these three models. The paper applies the cross-sectionally augmented autoregressive distributed lag (CS-ARDL) estimator to a dataset from ten OPEC members over the 1980–2019 period. The results clearly contradict the EKC hypothesis and reveal rather a persistent U-shaped pattern for all models in both the short-run and the long-run. In addition, financial globalization is negatively associated and political globalization is positively associated with CO2 emissions. The paper discusses how such oil–rich countries as OPEC may decouple economic growth, financial development, and industrialization trajectories from environmental pollution induced by fossil CO2 emissions.

Suggested Citation

  • Mehmet Demiral & Özkan Haykır & Emine Dilara Aktekin-Gök, 2024. "Environmental pollution effects of economic, financial, and industrial development in OPEC: comparative evidence from the environmental Kuznets curve perspective," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(10), pages 24905-24936, October.
    • Handle: RePEc:spr:endesu:v:26:y:2024:i:10:d:10.1007_s10668-023-03663-6
    DOI: 10.1007/s10668-023-03663-6
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