An Investigation of Economic Growth and Carbon Dioxide (CO2) Emissions in OPEC Countries: the Environmental Kuznets Curve Approach

It has been a controversial issue in recent decades that economic activities may put the environment in serious danger. Some believe that moving toward a healthier (more uncontaminated) and less polluted environment and also uproot poverty requires economic growth. In environmental economy, the relation between pollution and per capita income, which is the shape of a reverse U, is known as “Environmental Kuznets Curve”, EKC. In this study the application of Kuznets Curve to OPEC countries has come under investigation. For the theory test, CO2 has been employed as a stock polluter. The investigation has been performed using the panel data of the time period between 1985 and 2006. The results of the stationary test have revealed that the variables are non-stationary. Therefore, in order to study the existence of co-integration between variables, a Pedroni test of co-integration has been performed. The results of this test confirmed that a long term relationship existed between the variables. Also, between random effect model and the fixed effect model, the latter was accepted according to the Hasman test and the Kuznets Curve was estimated. The results rejected the Environment Kuznets Curve theory for OPEC countries and, as a matter of fact, the quantity of the CO2 gas disseminated through the environment has constantly increased along with the process of economic growth.