Influence of Economic Growth, Energy Production, and Subcomponents on the Environment: A Regional Level Analytical Modeling

Abstract

This study examines the long-term impact of energy production and economic growth on the environment using data on real GDP, energy production (and its subcomponents), carbon dioxide emissions, and real foreign trade. The datasets contain 99 countries that are classified into seven regions and analyzed by using MG, AMG, and CCEMG estimators. Estimates reflect that economic growth increases environmental pollution while foreign trade decreases it in all selected regions. In analyzing the conservation and neutrality hypotheses, we found that the conservation hypothesis was successfully verified for the global panel, Europe, and Africa, whereas the former was verified in North America, the Middle East, and the Asia Pacific regions. The study suggests focusing on renewable energy production policies to sustain the current growth pace.