What are the effects of economic globalization on CO2 emissions in MENA countries?

• Published in: Economic modelling 2022-11, Vol.116, p.106022, Article 106022
• Main Authors: Gaies, Brahim, Nakhli, Mohamed Sahbi, Sahut, Jean-Michel
• Format: Article
• Language: English
• Subjects: Asymmetric effects; CO2; Decarbonization; Financial globalization; Non-linear dynamics
• ISSN: 0264-9993; 1873-6122
• DOI: 10.1016/j.econmod.2022.106022

This paper explores whether economic globalization is (de)carbonizing the MENA region. Based on a comprehensive econometric analysis including ARDL and NARDL models for a panel of 17 MENA countries over the 1980–2018 period, it reveals the existence of asymmetric long-term impacts of economic globalization on CO2 emissions. As economic globalization increases, CO2 emissions increase, but the effect is much stronger for trade globalization than for financial globalization. On the other hand, the decrease in globalization has no effect. The study also shows that, the effects of financial globalization are different between OPEC and non-OPEC MENA countries. It appears that financial globalization pushes OPEC MENA oil-exporting countries to reduce their CO2 emissions with the transfer of technologies and the development of their financial market. These different results between OPEC and non-OPEC MENA countries allow us to propose differentiated policies for these two groups of countries. •In the MENA region, economic globalization has asymmetrical environmental impacts.•Globalization is carbonizing whereas deglobalization has no effect on CO2 emission for MENA countries.•The effect of globalization on CO2 emission is much stronger for trade globalization than financial globalization.•Financial globalization increases CO2 emissions in non-OPEC MENA countries and helps OPEC MENA countries to reduce them.