Analyzing the Heterogeneity of Economic Development and Carbon Emissions in the GCC Countries: Based on Panel Quantile Regression Approach

Abstract

This study explores the effects of energy use, tourism development, financial growth, foreign direct investment on economic growth, and the carbon emissions nexus for GCC countries from 1980 to 2018. GCC nations are currently facing higher demand and use of energy sources, FDI, tourism development, and improving financial sector that represents the major sustainable environmental and economic growth challenges. This study applies a Panel Quantile-Regression model that accepts distributional and unobserved individual heterogeneity. Furthermore, to avoid a response variable bias, some concerned cause variables are heterogeneous across quantiles in our method. The empirical outcomes indicate that the influence of FDI on CO2 emissions is statistically significant and negative, while tourism growth, energy use and financial growth have an ever-increasing impact on carbon emissions. Likewise, tourism growth decreases economic growth while FDI and energy use have been found to affect economic progress positively. Finally, the research outcomes also support policymakers with significant strategic recommendations.