Environmental Pollution In Iran

Analysis of the relationship between economic growth and environmental pollution in Iran (Evidence from manufacturing and services sectors)

Abstract

This article aims to answer the question of whether the manufacturing (and mining) and services sectors in Iran should be reconstructed or grown as before, in order to improve the environmental quality. The global warming, if not global burning, is a dire warning about environmental pollution dangers to everyone, living on the Earth. In this field, Iran is a good candidate due to its significantly high share of CO2 emissions in proportion to the low share of economic growth in the world which can be remedied by economic growth, based on Environmental Kuznets Hypothesis (EKH). We employ the Auto-Regressive Distributed Model (ARDL) to examine the long run equilibrium relationship between CO2 emission and economic growth. The results show that, regarding EKC, the nexus of CO2 emissions and economic growth in either sector is in a sharply ascending phase. It implies that if manufacturing (and mining) and services sectors inflate, the quality of environment will decline owing to the intensive and pollutant energy-using structures. Thus, rather than growing, they should be reconstructed by importing cleaner and more efficient technologies and developing internal inventions.

(2011), Ahmed and Long (2012), Boluk and Mert (2014), Katz (2014), Onafowora and Owoye (2014), Taghvaee and Shirazi (2014), CO2 emission can depend on economic growth and population structure. In contrast with the previous studies, in this study, economic growth splits into two various sectors: 1. Value added in manufacturing and mining 2. Value added in services. In order to test the none-linear relationship between environmental pollution and economic growth (EKC hypothesis) square and cubic value added in the sectors are applied in the specification as follows:

〖CO〗_t=f(x_t,x_t^2,x_t^3,ru), x = m, s (1) where CO is per capita Carbon Dioxide emission, x per capita value added in various economic sectors in Rial of Iran, ru rural population percentage, t the year, m the value added in manufacturing and mining, and s the value added in services.

We transform the linear model into a log-linear one because it allows us to check EKC hypothesis. In addition, log-linear models produce more consistent and efficient results, compared with linear ones. Thus the log-linear model is as follows:

〖LCO〗_t=α_0+α_1 Lx_t+α_2 Lx_t^2+α_3 Lx_t^3+α_4 〖Lru〗_t+dr+u_t