Impact of Oil Price, Economic Growth and Urbanization on CO2 Emissions in GCC Countries: Asymmetry Analysis

ABSTRACT

Oil prices and rapidly increasing urbanization could have a long-lasting impact on the environment in oil-abundant Gulf Cooperation Council (GCC) countries. Therefore, the environmental role of oil price, economic growth, and urbanization on CO2 emissions should be tested. The present study investigates the impact of oil price, economic growth, and urbanization on CO2 emissions in those countries, considering asymmetrical relationships. For this purpose, a nonlinear autoregressive distributive lag cointegration approach is applied in GCC countries during the 1980–2019 period, and cointegration is corroborated in all investigated models. Long-run results show that rising economic growth positively affects CO2 emissions in Kuwait, Oman, Qatar, and Saudi Arabia. Decreasing economic growth positively affects CO2 emissions in Bahrain, Kuwait, Qatar, and the United Arab Emirates (UAE). Moreover, the rising oil price has a positive impact on CO2 emissions and shows a scale effect in Oman, Qatar, and Saudi Arabia. Moreover, it has a negative effect and corroborates technique and composition effects in Kuwait and the UAE. Further, decreasing oil prices has a positive impact on CO2 emissions in Bahrain and has a negative effect in Kuwait and the UAE. Lastly, urbanization positively affects CO2 emissions in Bahrain, Oman, Qatar, and the UAE. Economic growth is found asymmetrical in all GCC countries, and the asymmetrical effect of oil price is also observed in all GCC countries except the UAE.