Economic determinants of Greenhouse gas emissions in Ethiopia: Bounds testing approach

Abstract

This paper aims at investigating the main economic determinants that contribute to greenhouse gases emissions in Ethiopia. By applying the bounds testing approach, the long and short-run impacts of economic growth, trade openness, and industry on air pollution in Ethiopia are estimated. The data set used in the estimation process covers the period (1981-2013). The study also attempts to find out whether the Environmental Kuznets Curve (EKC) hypothesis applies to the Ethiopian economy or not. Results indicate that both trade liberalization and industry, when they interact together, have adverse impacts on the environment in Ethiopia. Furthermore, there are still no evidences to support the existence of EKC in Ethiopia.

Key words: Bounds testing approach, EKC hypothesis, Ethiopia, Greenhouse gas emissions, Economic growth, Foreign Trade, Industry.