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The Inverted N-Shaped Relationship Between Economic Growth And Co2 Emissions: Evidence From Oecd Countries

Author

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  • Abdulkadir Bulut
  • Nazmiye Tekdemir

Abstract

Modern economic growth has led to increased levels of international trade, large-scale industrialisation, and major technological advancements, resulting in substantial negative externalities on a global scale. Among these, environmental degradation has emerged as a significant global public bad. Balancing economic growth objectives while addressing environmental challenges remains a critical issue for modern society. This study examines the relationship between economic growth and environmental degradation across 33 OECD countries during the period 1996- 2015, employing a fixed effects model with the Driscoll-Kraay standard error estimation approach. The analysis reveals an inverted N-shaped relationship between economic growth and CO₂ emissions, contradicting the conventional environmental Kuznets curve theory. The results also show that renewable energy consumption and stronger institutional quality help reduce CO₂ emissions, while non-renewable energy consumption and higher levels of industrial activity have the opposite effect.

Suggested Citation

  • Abdulkadir Bulut & Nazmiye Tekdemir, 2025. "The Inverted N-Shaped Relationship Between Economic Growth And Co2 Emissions: Evidence From Oecd Countries," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 70(244), pages 7-33, January –.
    • Handle: RePEc:beo:journl:v:70:y:2025:i:244:p:7-33
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    More about this item

    Keywords

    environmental quality; global public bad; EKC hypothesis; renewable energy; institutional quality;
    All these keywords.

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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