Carbon dioxide (CO₂) emissions and economic growth: A systematic review of two decades of research from 1995 to 2017

Highlights

• A review of 175 articles dealing with CO₂ and economic growth during 2 recent decades was performed.

• These papers were obtained from 55 journals refereed at WoS database.

• Qualitative systematic and meta-analysis method called “PRISMA” was applied.

• Articles have been categorized by author, techniques, countries, data analysis, results, etc.

• The bidirectional causality exists between economic growth and CO₂ emission trends.

Abstract

Understanding the nexus CO₂ emissions and economic growth helps economies in formulating energy policies and developing energy resources in sustainable ways. Although during recent years, numerous of the previous studies have been very thoroughly investigated the nexus between economic growth and CO₂ emissions, there is a lack of research regarding the qualitative systematic review and meta-analysis in these areas. The main purpose of this review paper is to present the comprehensive overview of the relationship between CO₂ emissions and economic growth. In this regard, the Web of Science database has been chosen and a qualitative systematic and meta-analysis method which called “Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA)” has been proposed. Therefore, a review of 175 published articles appearing in 55 scholarly international journals between 1995 and 2017 has been achieved to reach a broad review of the nexus between economic growth and CO₂ emissions with other indicators. Consequently, the selected articles have been categorized by the author name, the year of publication, data duration, types of techniques, data analysis method, the name of indicators, country, scope (individual country and multi-countries), journals, results, and outcome in which they appeared. The results of this paper demonstrated that the nexus between CO₂ emissions and economic growth gives reasons for policy options that have to reduce emissions by imposing limiting factors on economic growth as well. Given the fact that bidirectional causality exists, as far as economic growth increases or decreases, further CO₂ emissions are stimulated in higher or lower levels and consequently, a potential reduction of the emissions should have an adverse influence on economic growth.

Introduction

Over the past forty years the world economy has more than tripled (Knox et al., 2014). Despite economic growth raised standards of leaving in most countries, it was also responsible for an increase in CO₂ emissions and reduction in natural resources. The levels of emissions of CO₂ emissions are closely related to social, economic and industrial factors (Adom et al., 2012). CO₂ emissions are emitted in a number of ways such as burning of oil, coal, gas, petrol and also deforestation (Sanglimsuwan, 2011). The majority of previous studies for the past two decades has been intensively focused and confirmed the nexus among economic growth and energy use have a significant effect on the CO₂ emissions (Riti et al. (2017); Chaudhary and Bisai (2018); Bildirici (2017); Y.-J. Zhang et al. (2017); Robaina-Alves et al. (2016); Han et al. (2018); J. Song et al. (2018); Zhao et al. (2017); Alam et al. (2016); Antonakakis et al. (2017); Bekhet et al. (2017); He et al. (2017); Chiu (2017); Zhao et al. (2017)), for example, Riti et al. (2017) investigated relationships among economic growth, CO₂ emissions and economic growth between the years of 1970 to 2015 in China by using the theory of environmental Kuznets curve (EKC). Bildirici (2017), analyzed the relationship among biofuel consumption, economic growth, CO₂ emissions and militarization over the period of 1984–2015 in United State by using Panel autoregressive distributive lag model (ARDL), Canonical Cointegration Regression, Dynamic OLS and Fully Modified OLS. The results of this article demonstrated that; there existed the bi-directional link among economic growth, biofuel consumption, also, biofuel consumption, economic growth, CO₂ emissions and militarization, in addition; there was a bi-directional relationship between CO₂ emissions and biofuel consumption. Y.-J. Zhang et al. (2017) investigated the linkage between CO₂ emissions from household consumption and EC from 2000 to 2010 period by employing the input-output model in China. The outcomes of this study found that, there existed the indirect link between energy use and CO₂ emissions. Han et al. (2018) explored the link between fossil fuel-induced CO₂ emissions, economic growth and infrastructural materials in China. The findings Granger tests of this study found that; there was the unidirectional relationship between economic growth, CO₂ emissions and urbanization to material stocks. J. Song et al. (2018) used an input-output model to analysis the link between energy use and Greenhouse Gas Emissions (GHG). The outcomes of this study shown that; the amount of GHG and energy utilization reduce based on future planning in China and related sectors. Zhao et al. (2017) examined the decoupling impact of economic growth from CO₂ emissions by using Log mean Divisia index (LMDI) approach during the period of 1992–2012. Alam et al. (2016), investigated the effect of population growth, income and energy use on CO₂ emissions. The outcomes of this article concluded that, CO₂ emissions increased with increasing the income and energy use in four selected countries, and there existed the significant link between population growth and CO₂ emissions in India and Brazil and insignificant relationship in China and Indonesia. Antonakakis et al. (2017), investigated and analysis the dynamic interrelationship based on output–energy–environment nexus, CO₂ emissions, energy use and economic growth from the period of 1971–2011. The outcomes of this article shown that, the effect of the several kinds of energy CO₂ emissions on energy use and economic growth is heterogeneous and there is the bidirectional causal link between total economic growth and energy use. Bekhet et al. (2017), explored the relationship among financial development, CO₂ emissions, economic growth and energy use between 1980 and 2011. The outcomes of this article revealed that, economic growth increased CO₂ emissions in some countries like, Qatar, Saudi Arabia. Bahrain and Oman, also financial development was the main driver for reduction of energy emissions. He et al. (2017), investigated the relationship between CO₂ emissions, affluence, population and technology. The outcomes of this article revealed that, there is U relationship between CO₂ emissions and urbanization in three regions, and CO₂ emissions increase the income. The results of this paper found that, reducing the energy usage enhancing energy efficiency and improving clean energy usage can successfully affluence the influences of real income on CO₂ emissions. Zhao et al. (2017), analyzed the decoupling impact of economic growth on CO₂ emissions. The outcomes of this article demonstrated that, economic activity and energy intensity level have the critical influence for all sectors, and industrial sector was the most important factor which affects the decoupling in China.

In general, the authors of these papers have concluded that since CO₂ emissions attribute to economic growth, a reduction in emissions may not be a desirable outcome in emerging and developed nations. Concerning the nexus between economic growth and CO₂ emissions, there are three points of view in the literature: the first considers that economic growth causes CO₂ emissions and consequently, the higher the growth of a country's economy is, the higher the demand for energy becomes; the second states that there is a causal nexus in both directions between CO₂ emissions and economic growth whereas the last one, in contrast to the three aforementioned, argues that there is no causality running among them and thus the so-called neutrality hypothesis takes place. In this case, energy conservation policies should be appropriate to cope with the reduction of CO₂ emissions without affecting economic growth. Understanding the nexus between CO₂ emissions and economic growth will help economies in formulating energy policies and developing energy resources in sustainable ways. In recent years, the nexus between economic growth and CO₂ emissions have investigated by past published papers with diverse approaches and techniques. This presents a considerable gap in the literature, as an in-depth study can reveal the significant variables that account to a link between CO₂ emissions and economic growth. Therefore, this review paper has been used the PRISMA statement to present the systematic review and meta-analysis of the relationship between CO₂ emissions and economic growth. In this regard, to present the comprehensive overview of the relationship between CO₂ emissions and economic growth, this study reviewed and grouped the selected articles by various importance criteria such as, application area, author, scope, technique, type of data analysis, research purpose, results and outcome, journals, year of publication and nationality of authors.

The remainder of this review study is structured as follows. Section 2 presented the linkage among economic growth, energy consumption and CO₂ emissions. Section 3 discusses research methodology of the paper; Section 4 presents results and findings of this paper based on the study aims. Section 5 of this paper attempted to discuss the obtain findings and results and Section 6 provides some conclude remarks, limitations of this study, and suggestions for future papers.