by Duygu Çelik and Mustafa Kerem Börü
ABSTRACT
This review surveys the influence of economic growth, trade openness, and energy consumption on environmental pollution (specifically, CO2 emissions) within a group of developing economies. The sample consists of 37 countries classified as upper-middle-income developing economies by the World Bank, covering the period from 2000 to 2023. The estimations were conducted via the Parks-Kmenta Feasible Generalized Least Squares (FGLS) method. The evidences remark that a 1% rise in economic growth (GDP) leads to a 2.71% rise in CO2 emissions. This affair persists up to a certain threshold; initially, economic growth degrades environmental quality. However, this process lastly peaks, reaching a turning point where the affair inverts in later stages of development. Beyond this turning point, a 1% rise in economic growth (represented by the squared GDP term) diminishes CO2 emissions by 0.16%. In other words, as wealth improves beyond a specific income level, greater emphasis is placed on environmental quality, leading to a reduction in pollution. Regarding other variables, a 1% rise in energy use (ENG) boosts CO2 emissions by 1.73%. Conversely, a 1% rise in trade openness (TRD) diminishes emissions by 2.08%, and a 1% rise in renewable energy consumption (REW) leads to a 0.17% reduction in emissions. Urban population density (URB), included as a control variable, is found to rise CO2 emissions by 1.06% for every 1% increment. An analysis of the variables discloses that the primary driver of environmental degradation is the economic growth efforts of countries at lower income levels (GDP impact: 2.71%). Besides, the calculated turning point for the studied countries is $3,077 per capita. This purports that environmental pollution rises until per capita income reaches $3,077, peaks at this level, and afterwards, the influence of economic growth on pollution shifts from positive to negative.
