Title: Environmental performance of OPEC countries: addressing the role of gross domestic product, energy consumption, trade openness and industrial structure

Authors: Seyedhossein Sajadifar; Azam Mohamadbagheri

Addresses: Department of Economics, Islamic Azad University, Shahryar Branch, Tehran, Iran ' Institute for International Energy Studies, Tehran, Iran

Abstract: Based on the Kuznets's environmental theory, we examine the effect on carbon dioxide (CO₂) emission of gross domestic product (GDP), energy consumption, trade openness, and industrial structure in OPEC countries during 1974-2013, using the Full Modified Ordinary Least Square (FMOLS) method. We find that GDP, energy consumption, and industrial structure have positive effects on CO₂ emission. The GDP squared, however, negatively affects CO₂, although the effect is small. The positive effect of GDP but negative effect of GDP squared validates the environmental Kuznets curve for OPEC countries. In addition, we find that an increase in trade openness leads to decrease in CO₂ emission. Using the panel vector error correction model (VECM) and Granger causality test, we confirm that long-run causality is supported for all of our equations. We also find bi-directional short-run causality between energy consumption and CO₂ emission and between energy consumption and industrial structure. Moreover, we find one-way causality running from energy consumption to GDP, from CO₂ emission to trade openness, from GDP to trade openness, and from GDP to emission.

Keywords: environmental Kuznets curve; full modified ordinary least square; vector error correction model; OPEC countries.

DOI: 10.1504/IJGE.2018.097870

International Journal of Green Economics, 2018 Vol.12 No.3/4, pp.258 - 271

Accepted: 07 Nov 2018
Published online: 20 Feb 2019 *

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