Testing the Environmental Kuznets Curve in Egypt: Role of Foreign Investment and Trade
We test the Environmental Kuznets Curve (EKC) augmenting CO2 emissions model for Egypt using cointegration technique for period 1990-2014. Cointegration is found in the hypothesized model and EKC hypothesis validates from empirical testing as well. Further, energy consumption seems to be accelerating CO2 emissions per capita while Foreign Direct Investment (FDI) is found helpful in reducing CO2 emissions per capita. However, the effect of trade is found insignificant. We recommend Egyptian government to attract further foreign investment to support a cleaner environment.
Keywords: Environmental Kuznets Curve Hypothesis; Foreign Direct Investment; Trade Openness; Egypt
JEL Classifications: F18; O13; F21