The Impact of Economic Growth, Financial Development, and Trade Openness on Environmental Degradation in Egypt

Authors

  • Farman M. Ahmed Department of Banking and Finance, College of Business Economy, Eastern Mediterranean University, Famagusta, North Cyprus
  • Dlawar M. Hadi Department of Accounting, College of Business, Komar University of Science and Technology, Sulaymania, Kurdistan Region, Iraq https://orcid.org/0000-0003-1013-7230
  • Aso K. Ahmed Department of Business Management, College of Business, University of Swez, Canal, Ismailia, Egypt

DOI:

https://doi.org/10.25156/ptj.v10n1y2020.pp98-102

Keywords:

Economic growth, Financial development, Trade openness, CO2 emissions, Egypt

Abstract

This paper examines the effects of economic growth, financial development, and trade openness on the environment quality measured by CO2 emissions over the period of 1965–2014 in the case of Egypt. In this study, the series were stationary at their first difference form, and thus, a long-run model was adopted using the vector error correction model technique. The results confirm that the variables are cointegrated, indicating the long-run relationship between the variables. The empirical findings reveal a negative influence of economic growth and financial effect of the previous period of CO2 emissions, these effects are not significant in the short run. Any deviations from the long-run equilibrium return quickly, representing 59% speed of adjustment. The study proposes new policy insights into reduce CO2 emissions, especially in the long run.

Downloads

Download data is not yet available.

References

Al-Wahaidy, F. 2017. Egypt’s Approach to Protecting the Environment. Available from: https://www.egypttoday.com/Article/1/8836/Egypt%E2%80%99s-approach-to-protecting-the-environment. [Last accessed 2019 Nov 16].

Chen, S. 2009. Energy consumption, CO2 emission and sustainable development in Chinese industry. Econ. Res. J. 4(1): 1-5.

Dickey, D. A. and W. A. Fuller. 1979. Distribution of the estimators for autoregressive time series with a unit root. J. Am. Stat. Assoc. 74(366a): 427-431.

Dinda, S. and D. Coondoo. 2006. Income and emission: A panel databased cointegration analysis. Ecol. Econ. 57(2): 167-181.

Frankel, J. A. and D. H. Romer. 1999. Does trade cause growth? Am. Econ. Rev. 89(3): 379-399.

Halicioglu, F. 2009. An econometric study of CO2 emissions, energy consumption, income and foreign trade in Turkey. Energy Policy. 37(3): 1156-1164.

Hassanein, S. N. D. 2019. Air Pollution in Cairo-the Cost. Available from: http://www.arabworldbooks.com/articles1.html. [Last accessed on 2019 Nov 25].

Jalil, A. and M. Feridun. 2011. The impact of growth, energy and financial development on the environment in China: A cointegration analysis. Energy Econ. 33(2): 284-291.

Jha, S. K. 1996. The Kuznets curve: A reassessment. World Dev. 24(4): 773-780.

Katircioglu, S. and A. Celebi. 2018. Testing the role of external debt in environmental degradation: Empirical evidence from Turkey. Environ. Sci. Pollut. Res. 25(9): 8843-8852.

Katircioglu, S. T. 2009. Revisiting the tourism-led-growth hypothesis for Turkey using the bounds test and Johansen approach for cointegration. Tour. Manage. 30(1): 17-20.

Katircioglu, S. T. and N. Taşpinar. 2017. Testing the moderating role of financial development in an environmental Kuznets curve: Empirical evidence from Turkey. Renew. Sustain. Energy Rev. 68: 572-586.

King, R. G. and R. Levine. 1993. Finance and growth: Schumpeter might be right. Q. J. Econ. 108(3): 717-737.

Kumbaroglu, G., N. Karali and Y. Arıkan. 2008. CO2, GDP and RET: An aggregate economic equilibrium analysis for Turkey. Energy Policy. 36(7): 2694-2708.

List, J. A. and C. A. Gallet. 1999. The environmental Kuznets curve: Does one size fit all? Ecol. Econ. 31(3): 409-423.

Managi, S. and P. R. Jena. 2008. Environmental productivity and Kuznets curve in India. Ecol. Econ. 65(2): 432-440.

Nasir, M. and F. U. Rehman. 2011. Environmental Kuznets curve for carbon emissions in Pakistan: An empirical investigation. Energy Policy. 39(3): 1857-1864.

Panayotou, T. 1993. Empirical Tests and Policy Analysis of Environmental Degradation at Different Stages of Economic Development (No. 992927783402676). International Labour Organization, Geneva, Switzerland.

Phillips, P. C. and P. Perron. 1988. Testing for a unit root in time series regression. Biometrika. 75(2): 335-346.

Roca, J. 2003. Do individual preferences explain the environmental Kuznets curve? Ecol. Econ. 45(1): 3-10.

Runge, C. F. 1994. Free Trade, Protected Environment: Balancing Trade Liberalization with Environmental Interests. Council on Foreign Relations, United States.

Shafik, N. 1994. Economic Development and Environmental Quality: An Econometric Analysis. Oxford Econ. Papers. 46: 757-773.

Shahbaz, M., A. K. Tiwari and M. Nasir. 2013. The effects of financial development, economic growth, coal consumption and trade openness on CO2 emissions in South Africa. Energy Policy. 61: 1452-1459.

Shahbaz, M., H. H. Lean and M. S. Shabbir. 2012. Environmental Kuznets curve hypothesis in Pakistan: Cointegration and Granger causality. Renew. Sustain. Energy Rev. 16(5): 2947-2953.

Shahbaz, M., Q. M. A. Hye, A. K. Tiwari and N. C. Leitão. 2013. Economic growth, energy consumption, financial development, international trade and CO2 emissions in Indonesia. Renew. Sustain. Energy Rev. 25: 109-121.

Tadesse, S. 2005. Financial Development and Technology, Working Paper no. 749. William Davidson Institute, Michigan.

Tamazian, A. and B. B. Rao. 2010. Do economic, financial and institutional developments matter for environmental degradation? Evidence from transitional economies. Energy Econ. 32(1): 137-145.

Tamazian, A., J. P. Chousa and K. C. Vadlamannati. 2009. Does higher economic and financial development lead to environmental degradation: Evidence from BRIC countries? Energy Policy. 37(1): 246-253.

Tiwari, A. K., M. Shahbaz and Q. M. A. Hye. 2013. The environmental Kuznets curve and the role of coal consumption in India: Cointegration and causality analysis in an open economy. Renew. Sustain. Energy Rev. 18: 519-527.

Tucker, M. 1995. Carbon dioxide emissions and global GDP. Ecol. Econ. 15(3): 215-223.

Volume 10, Number 1 (2020)

Downloads

Published

2020-06-30

How to Cite

Ahmed, F. M., Hadi, D. M., & Ahmed, A. K. (2020). The Impact of Economic Growth, Financial Development, and Trade Openness on Environmental Degradation in Egypt. Polytechnic Journal, 10(1), 98-102. https://doi.org/10.25156/ptj.v10n1y2020.pp98-102

Issue

Vol. 10 No. 1 (2020)

Section

Research Articles

License

Copyright (c) 2020 Farman M. Ahmed, Dlawar M. Hadi, Aso K. Ahmed

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Authors who publish with this journal agree to the following terms:
1. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License [CC BY-NC-ND 4.0] that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).

Most read articles by the same author(s)