The Impact of Macroeconomic Variables on CO2 Emissions in MENA Countries Abstract In recent years, CO2 emissions have become a global concern, exacerbated by population growth, rapid economic development, and industrialization. Countries in the ME

Document Type : Original Article

Author

hamidreza ARBAB

Associate Professor, Department of Business Economics, Allameh Tabataba'i University, Tehran, Iran

https://doi.org/10.22067/erd.2025.92925.1282

Abstract

In recent years, CO2 emissions have become a global concern, exacerbated by population growth, rapid economic development, and industrialization. Countries in the MENA region, as the largest producers and exporters of fossil fuels globally, have been significant contributors to climate change and have thus attracted considerable attention. Against this backdrop, the present study investigates the impact of macroeconomic variables on CO2 emissions in MENA countries. To achieve this objective, annual panel data from 1990 to 2023 were collected for 19 MENA member countries. The key variables included per capita CO2 emissions (dependent variable), urbanization rate, agriculture, renewable energy consumption, foreign direct investment (FDI), per capita internet usage as a proxy for information and communication technology (ICT), gross domestic product (GDP), and its square. All variables were sourced from the World Bank. Considering the influence of lagged dependent variables on recurring CO2 emissions, the generalized method of moments (GMM) was employed. The results of Hansen and Sargan tests validated the instruments used in both Difference GMM and System GMM estimations. The main findings revealed that the selected macroeconomic variables significantly impact CO2 emissions. Increases in urbanization, agriculture, FDI, and GDP lead to increased CO2 emissions, while renewable energy consumption contributes to reduced emissions. Furthermore, the relationship between GDP and CO2 emissions was confirmed to be nonlinear and inverse (inverted U-shaped curve).

Keywords

CO2 emissions

MENA countries

GDP

Environmental Kuznets Curve (EKC)

GMM

Subjects

• economic development

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