The Impact of Economic Growth, Financial Development, and Trade Openness on Environmental Degradation in Egypt

Farman M. Ahmed, Department of Banking and Finance, College of Business Economy, Eastern Mediterranean University, Famagusta, North Cyprus,
Dlawar M. Hadi, Department of Accounting, College of Business, Komar University of Science and TechnologyFollow
Aso K. Ahmed, Department of Business Management, College of Business, University of Swez, Canal, Ismailia, Egypt

Corresponding Author

Dlawar M. Hadi

Authors ORCID

0000-0003-1013-7230

Document Type

Research Article

Abstract

This paper examines the effects of economic growth, financial development, and trade openness on the environment quality measured by CO2 emissions over the period of 1965–2014 in the case of Egypt. In this study, the series were stationary at their first difference form, and thus, a long-run model was adopted using the vector error correction model technique. The results confirm that the variables are cointegrated, indicating the long-run relationship between the variables. The empirical findings reveal a negative influence of economic growth and financial effect of the previous period of CO2 emissions, these effects are not significant in the short run. Any deviations from the long-run equilibrium return quickly, representing 59% speed of adjustment. The study proposes new policy insights into reduce CO2 emissions, especially in the long run.

Keywords

Economic growth, Financial development, Trade openness, CO2 emissions, Egypt

How to Cite This Article

Ahmed, Farman M.; Hadi, Dlawar M.; and Ahmed, Aso K. (2020) "The Impact of Economic Growth, Financial Development, and Trade Openness on Environmental Degradation in Egypt," Polytechnic Journal: Vol. 10: Iss. 1, Article 17.
DOI: https://doi.org/10.25156/ptj.v10n1y2020.pp98-102