Export diversification, energy consumption, economic growth and environmental degradation: evidence from Oman

Abstract

Export diversification's role in reducing environmental degradation, especially in oil-dependent countries, has been overlooked. This study investigated the effect of export diversification, along with energy consumption and economic growth as important control variables, on CO2 emissions and ecological footprint in Oman from 1984 to 2014 by employing the Autoregressive Distributed Lag (ARDL) model. To ensure the stability of the model, robust long-run relationship estimators including Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) were used. The results suggest that export diversification has a positive impact on Oman's environmental degradation. A positive effect of energy on both environmental indicators was found, with a lower effect on CO2 emissions. Diversification of exports is strongly recommended in Oman by shifting to more energy-efficient, environmentally friendly, and high-tech industries.