Economic Growth and Air Pollution in the Persian (Arabian) Gulf States: Environmental Kuznets Curve Hypothesis

Abstract

This paper examines the relationship between economic growth (GDP per capita) and air pollution (CO2 emission per capita) in the Persian Gulf States based on the Environmental Kuznets Curve (EKC) hypothesis using regression analysis. First, the results provide weak support for the EKC hypothesis over the time series of data of 35 years from 1980 to 2014 spanning seven states. Instead, a positive linear relationship is suggested so that growth is associated with increasing emissions. Second, the factors underlying the rejection of the EKC hypothesis include institutional challenges for emission reduction such as (1) political restrictions, (2) soft budget constraints that are less-environmentally-friendly and (3) underdeveloped waste management, Third, weak support for the EKC hypothesis suggests opportunities for Japan to boost its international presence by participating in the Gulf States in decoupling economic growth from CO₂ emissions.