Investigating Dynamic Effect of Energy Consumption, Foreign Direct Investments and Economic Growth on CO2 Emissions between Oman and United Arab Emirates: Evidence from Co Integration and Causality Tests

Shrikant Krupasindhu Panigrahi, Noor Azlinna Binti Azizan, Sumathi Kumaraswamy


The main objective of this paper is to examine the dynamic impact of energy consumption, foreign direct investments, and economic growth on carbon emissions by employing dynamic estimation techniques of co-integration for Oman and the United Arab Emirates. This study used quarterly panel data of Oman and UAE over the period 1991-2018. Generalized method of moments (GMM), Granger causality test is applied to perform causal relationships among the constructs. The empirical econometric results revealed that there is a strong co-integration of the variables in the case of Oman but not for the United Arab Emirates. In other words, there is a strong positive effect of energy consumption and foreign direct investment on CO2 emission in Oman and the United Arab Emirates; whereas economic growth possesses a strong negative effect on CO2 emissions. The estimation did not support the EKC hypothesis and was found to be not applicable in Oman and UAE. Further discussions on the implications of the results are provided.

Keywords: energy consumption, foreign direct investment, economic growth CO2 emissions, Oman, UAE

JEL Classifications: F43; F16; L94


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