Globalization toward environmental sustainability and electricity consumption to environmental degradation: does EKC inverted U-shaped hypothesis exist between squared economic growth and CO2 emissions in top globalized economies

Abstract

The study inspects the inverted U shape of the environmental Kuznets curve (EKC) hypothesis following the influence of economic growth on CO₂ emissions and the reaction of electricity consumption and globalization toward CO₂ emissions in top globalized economies. This study has taken the data of the top 9 globalized countries from 1990 to 2019 while adopting fully modified ordinary least squares and dynamic ordinary least squares panel cointegration approaches to determine the long run effects and Dumitrescu and Hurlin panel causality for the directions of the causality among the variables. According to the long-term findings of the research, economic growth and electricity consumption substantially contribute to CO₂ secretions. On the other hand, the squared growth and globalization mitigate CO₂ emissions and contribute to environmental sustainability. However, the inverse influence of squared growth on CO₂ emissions shows the presence of the inverted U shape of the EKC hypothesis. Furthermore, Dumitrescu and Hurlin causality measures have shown the bi-directional causality of electricity consumption and economic growth with CO₂ emissions and globalization with economic growth. At the same time, unidirectional causality exists from globalization to CO₂ emissions, economic growth to electricity consumption, and electricity consumption to globalization. The study recommends long-term globalization and sustainable development projects to ensure environmental sustainability in these globalized economies.

Keywords: Electricity consumption; FMOLS and DOLS; Globalization; Inverted U shape of EKC; Squared economic growth; Top globalized economies.