Investigating the Impact of Human Capital on the Relationship between Environmental Pollution and Economic Growth in MENA Countries

The economic growth model can examine the direct and indirect effects of human capital on economic growth. One of the indirect factors is environmental pollution. But in the meantime, one should not overlook the limitations of the advocates of this theory, such as the Impact of Human Capital Utilization on reducing environmental pollution, in order to achieve goals and policies similar to those of developed economies. Therefore, the purpose of this research is to investigate the impact of human capital on Kuznets’ emphasized relationship, the threshold relation of environmental pollution and economic growth.

Therefore, using the data from 14 countries in the MENA area for the period 2000 - 2016, the Generalized Method of Moment (GMM) or dynamic data panel method was used to test the hypothesis.

The relationship between environmental pollution (CO2 emissions) and economic growth is nonlinear and the Kuznets curve hypothesis in the selected research sample confirms the existence of an inverse U-shaped relationship between economic growth and pollution emissions. Higher the human capital with the current level of greenhouse gas emissions, lead to the higher economic growth in selected countries.

Increased growth due to the accumulation of human capital can play a moderating role on the negative relationship between environmental pollution and economic growth of the selected research set. With the increase of human capital at any level of environmental pollution, the threshold point of the negative relationship between environmental pollution and economic growth is delayed. In other words, as knowledge-based and human capital-based development increases the negative relationship between environmental pollution and economic growth is moderated.