Title : Economic growth, energy intensity, and carbon emissions in developing and emerging economies: Policy lessons from two decades of evidence
Abstract:
This study examines the relationship between economic growth, energy intensity, renewable energy, research and development (R&D), and fiscal capacity in explaining carbon dioxide (CO?) emissions among 19 developing and emerging economies from 2001 to 2020. Data were sourced from the World Development Indicators (WDI) of the World Bank. All variables were converted into natural logarithms to stabilize variance and interpret elasticities. Due to the limited time dimension and absence of lagged dependent variables, the analysis employs a static panel model estimated using Fixed Effects (FE) and Random Effects (RE) estimators. The Hausman test determined the more efficient specification, while cluster-robust standard errors were applied to correct for heteroskedasticity and within-panel correlation.
Results indicate that economic growth and energy intensity significantly and positively influence CO? emissions, confirming that rapid industrialization and energy inefficiency remain dominant drivers of environmental degradation. In contrast, renewable energy consumption and R&D expenditure show significant negative effects, implying their potential to mitigate emissions through clean-energy transitions and innovation. The squared GDP term (lnGDP²) produces a negative but weakly significant coefficient, offering limited support for the Environmental Kuznets Curve (EKC) hypothesis. Tax revenue is statistically insignificant, suggesting that general fiscal expansion alone is insufficient to achieve emission reductions without targeted green taxation.
The findings underscore the need for integrated policy strategies combining energy efficiency standards, renewable energy incentives, innovation support, and environmentally oriented fiscal reforms to achieve sustainable, low-carbon growth in developing and emerging economies.
