Does democracy improve environmental quality of GCC region? Analysis robust to cross-section dependence and slope heterogeneity

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Abstract
Since the developed world’s economic prosperity has been heavily reliant on excessive fossil-based energy consumption, it has posed severe environmental quality challenges. This research attempts to revisit the relationship between income and anthropogenic emissions in the context of the environmental Kuznets curve (EKC) theory by considering electric power consumption, urbanization, and democratic accountability index in the Gulf Cooperation Council (GCC) region. It employs annual frequency panel data from 1990 through 2019 and three alternative advanced econometric estimation techniques. The main findings are as follows: Firstly, the EKC results for the whole sample strongly support the proposition of an inverse U-shaped connection between anthropogenic emissions and affluence in the long run. Secondly, the country-specific results confirm EKC only in Saudi Arabia and Bahrain, while the remaining countries demonstrate a U-shaped connection. Thirdly, the democratic accountability promoted anthropogenic emissions implying that it failed to contribute to environmental protection. It means that democratic setup in the GCC region performs poorly in accomplishing climate change mitigation and Sustainable Development Goals (SDGs). Fourthly, electric power consumption and urbanization impart positive and negative impacts on anthropogenic emission, respectively. These findings are found robust across the fully modified ordinary least square (FMOLS), bias-corrected LSDV (least squares dummy variable) (LSDV), and pooled mean group (PMG) estimators. Finally, Dumitrescu-Hurlin panel causality shows that (i) income and urbanization establish a two-way causality with the anthropogenic emissions. (ii) However, a unidirectional causal connection is revealed from electric power consumption and democratic accountability index to anthropogenic emissions. The findings suggest that the GCC region should prioritize environmental protection and SDGs across the political aims’ recipe since it would direct the region on the path of climate change mitigation.

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