Environmental Footprints of Economic Development, Foreign Investment, Tourism, and Electricity Production: Empirical Evidence from GCC Region

Abstract Each economic factor generates both positive and negative externalities regarding environmental quality. Owing to this, the current study explores the impacts of various economic factors on the environmental quality of GCC region. By sampling the 24-years (1996-2019) financial statistics of six GCC region countries, we investigate the impact of economic development, foreign investment, trade volume, tourism investment and revenue, and electricity production etc., on CO2 emissions. The empirical analysis is based upon FMOLS (fully modified ordinary least square) model due to existence of cointegration. Following the results, economic development, foreign investment, tourism investment, electricity production, and population density have positive while trade volume and banking development have negative impact on volume of CO2 emissions. The results support the pollution haven hypothesis in GCC region and have many policies for environmental economists regarding the protection of natural environment both in short and long-run. The current analysis offers new insights regarding the dynamic role of various economic factors in establishing the CO2 emission volume in GCC region.