Abstract
This paper examines the impact of renewable energy consumption, economic growth, foreign direct investment inflows and trade on carbon dioxide emissions for a panel of 12 Middle East and North Africa countries over the period 1980-2012 using the recent Panel Vector Autoregressive model with multi-domain analysis framework. The results from Granger causality test reveal a bidirectional causality relationship between the candidate variables supporting the feedback hypothesis. The findings show that economic growth leads to environmental degradation while renewable energy, international trade and foreign direct investment inflows lead to decreases carbon dioxide emissions. A serious shift toward using more renewable energy resources, international trade and foreign direct investment inward is recommended to improve the environmental quality and attain the sustainable growth in the region.
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