Sectoral GHG Emissions in the MENA Region: The Role of Financial Variables

This chapter explores the complex interplay between global greenhouse gas emissions and economic and financial variables across different sectors in the MENA region. It aims to analyze how foreign debt, foreign direct investment (FDI), patents, energy consumption, renewable energy, GDP growth, and urban population influence greenhouse gas emissions in the agricultural, industrial, and service sectors. The study employs three dynamic models: Generalized Method of Moments (GMM), Vector Autoregressive with Exogenous Variables (VARX), and Pooled Mean Group–Autoregressive Distributed Lag (PMG-ARDL). The models are applied to annual data from 1990 to 2020 to estimate the relationship between financial and environmental variables across the MENA region. The results reveal that some variables, such as energy consumption and urban population, have a positive impact on greenhouse gas emissions, while others, including renewable energy and patents, contribute to reducing emissions. The study further examines both shortterm and long-term effects, highlighting that the agricultural sector may contribute to emissions, but its impact on industrial emissions varies based on economic, environmental, and policy factors. The findings emphasize the need for MENA governments to promote low-carbon and green development strategies. Policymakers should focus on encouraging renewable energy adoption and sustainable economic practices to effectively mitigate greenhouse gas emissions and address climate change challenges.