The Economic Growth and Environmental Sustainability Nexus: a Metanalysis of Three Economic Types

Recently, emerging, developed, and developing economies have placed great emphasis on the need to attain environmental sustainability while achieving economic expansion. In an effort to offer possible policy options toward the attainment of sustainable development, this study examines the effect of economic growth on carbon emissions mitigation. Yearly panel data for 44 countries comprised of emerging, developed, and developing economies from 1990 to 2017 is used. To address the gap in the literature, this nexus is examined on seven layers of carbon emissions. This study reveals reliable and robust empirical findings with the use of system and difference general method of moments, random and fixed effects using the Durbin-Wu-Hausman test model, and feasible general least-squares estimation approaches. Our findings indicate that for developed economies, carbon emissions by the power industry have been mitigated and increased domestic credit to the private sector leads to a decrease in all layers of carbon emissions. Nevertheless, gross national income increase negatively impacts emissions by the transport sector. In emerging and developing economies, increased domestic credit to the private sector increases emissions by the power industry, transport sector, buildings, other combustion industries, and other non-major sectors. For all economies, an increase in domestic savings leads to an increase in all layers of carbon emissions. Compared with prior studies that simply focus on gross domestic product and total carbon emissions, our study provides detailed insights on the carbon emissions mitigation efforts by sector and economic group given the true drivers of economic expansion.