The effect of economic growth on carbon dioxide emissions in Somalia: an environmental Kuznets curve analysis

Abstract

This study investigates the effect of economic growth on CO₂ emissions in Somalia, testing whether the Environmental Kuznets Curve (EKC) holds. The EKC posits that as income per capita rises, environmental degradation first increases and then decreases after a turning point, forming an inverted “U”. Using annual time series data from 1990 to 2023, the research employed the Autoregressive Distributed Lag (ARDL) model to estimate both short-run and long-run dynamics among CO₂ emissions, GDP per capita, trade openness, and gross capital formation. The study also performs Granger causality tests and diagnostic checks to ensure robustness. The results show that GDP per capita has a negative, statistically significant effect on CO₂ emissions in the long run (β₁ = −2.137, p = 0.0010), while the squared term is positive and significant, indicating a U-shaped relationship. The implied turning point is about USD 411 per capita: below USD 411, higher income is associated with lower CO₂ emissions; above USD 411, further income growth is associated with higher CO₂ emissions. This pattern is U-shaped and therefore does not support the EKC hypothesis. Granger causality tests confirm a unidirectional causality from GDP to CO₂ emissions, with no reverse effect. The study recommends integrating strong environmental safeguards into Somalia’s trade policy to prevent the growth of pollution-intensive industries. It further emphasizes the need for investment in clean infrastructure as a means to support sustainable economic growth. Strengthening institutional capacity for emissions monitoring and regulatory enforcement is essential to ensure compliance and accountability.