Environmental Science and Pollution Research

https://doi.org/10.1007/s11356-021-15660-1

RESEARCH ARTICLE

Exploring the relationship between economic growth, energy

consumption, urbanization, trade, and CO2 emissions: a PMG-ARDL
panel data analysis on regional classification along 81 BRI economies
Yao Hongxing 1,2 & Olivier Joseph Abban 1 & Alex Dankyi Boadi 3 & Evans Takyi Ankomah-Asare 4

Received: 12 May 2021 / Accepted: 22 July 2021

# The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature 2021

Abstract
The vision of every country or sub-regions is to achieve sustainable economic growth. The inability of individual countries to
have a sole sustainable initiative has resulted in the establishment of economic cooperation such as the Belt and Road Initiative
(BRI), which renders interaction among 138 relevant countries to increase economic development. This study delves into the
determinants of economic growth along the BRI economic corridors, taking into consideration regional classification of the
relevant countries. The analytical procedure applied indicated the presence of heterogeneity in the slope coefficient and cross-
sectional dependencies across the various panels. Applying the Westerlund bootstrap co-integration test, it was deducted that the
employed variables have a long-run equilibrium association. The results from the pooled mean group (PMG) revealed that the
contribution weight (order of importance) of the explanatory variables to economic growth varies across the regional panel
clusters. Finally, the causality results unveil that a bidirectional causation affiliation exists between energy consumption and
economic growth in all panels except Southeast and South Asia which experience one-way directional effects from energy usage
to economic growth. Trade and economic growth unveiled a bidirectional causal affiliation in all panel groups with exception of
the Middle East and North Africa, where a one-way directional affiliation from trade to economic growth was felt. These results
obtained indicate that energy consumption, urbanization, trade, and CO2 emissions are determinants of economic growth along
the BRI route. Based on the outcome, the suggested policy implications include the following: (a) The government across each
region could incorporate tax and other incentives to encourage entrepreneurs and citizens to produce equipment that reduces
carbon intensity and is ecologically friendly. (b) The necessity for a paradigm shift away from fossil fuels and towards renewable
energy sources should be advocated among the countries involved.

Keywords BRI economies . Energy consumption . Trade . Economic growth . PMG estimation

Introduction

Responsible Editor: Nicholas Apergis Economic cooperation occurs when two or more countries
collaborate to improve their economies through trade and fi-
* Olivier Joseph Abban nancial assistance, among others. Inability of individual coun-
olivierjosephs@yahoo.com tries to attain economic growth by depending solely on itself
necessitates economic cooperation (Lorenz 1999). Thus, as an
1
School of Mathematical Science, Institute of Applied Systems and economic cooperation, the Belt and Road Initiative (BRI) pro-
Analysis (IASA), Jiangsu University, Zhenjiang 212013, People’s posed an economic interaction between China and its partners.
Republic of China The initiative aims to improve connectivity between countries
2
School of Finance and Economics, Jiangsu University, along its route in terms of investment, trade, and infrastructure
Zhenjiang 212013, People’s Republic of China (Zhang et al. 2021). The New Maritime Silk Road known as
3
Directorate of Research, Innovation and Consultancy, University of the “Road” connects China to Africa, Gulf, and Southeast
Cape Coast, Cape Coast, Ghana Asian countries, as well as Europe, while the Silk Road
4
National Commission for Tertiary Education, Accra, Ghana Economic Belt known as the “Belt” connects China to South

and Central Asia and Europe. According to the Chinese gov-
ernment, the BRI’s ultimate goal is a win-win cooperation that
promotes mutual growth and prosperity (Li et al. 2021).
Zhang et al. (2021) stated that the BRI is a five-part bundle
that includes infrastructure connectivity, financial integration,
trade facilitation, coordination of development strategies and
policies, and people-to-people exchange.
Taking into account the per capita of the economies along
the BRI’s route, most countries in Sub-Saharan Africa,
Central, and South Asia per the World Bank’s categorization
are low and lower countries that are having a per capita less
than US$ 4,000.00 (Dong et al. 2020), whereas most countries
in the Middle East and North Africa, East Asia, and Europe
are known to be upper middle-income countries and high-
income countries, with an average per capita of $4,126 and
above $12,736 (Dong et al. 2020). Thus, increasing economic
growth in lower economies while maintaining sustainable
economic growth in the upper middle and high countries is
vital to the BRI. Figure 1 depicts the gross domestic product
along the BRI countries in 2013 and 2018.
Many socioeconomic factors have been cited as
influencers of economic growth, including infrastructure
development, energy use, trade openness, population
growth, a corruption-free society, financial sector devel-
opment, and good governance policy, among others
Fig. 1 Gross domestic product of
countries along the BRI in 2013
and 2018 (source: author)
Environ Sci Pollut Res
(Jannat et al. 2020). Among these factors, energy usage,
population growth, trade, and urbanization which result in
CO2 emissions are thought to play a controversial role in
economic growth (Khan et al. 2020). Zahonogo (2016)
stated that trade openness has a negative significant effect
on economic growth with low financial development but
has an insignificant effect in countries with high financial
development in Sub-Saharan Africa, which is contrary to
Amna Intisar et al. (2020) who posit that trade openness
has a significant positive impact on economic growth.
Chen et al. (2020) unveiled that energy usage has a neg-
ative significant effect on economic growth in a 103-panel
sample, while Muhammad (2019) stated that energy usage
has a significant positive impact on economic growth.
Thus, from the above studies, the relationships of the de-
terminants of economic growth were inconclusive.
Odugbesan and Rjoub (2020) posit that the inconclusive-
ness of economic growth’s determinants is as a result of
ad hoc approaches employed, different sample sizes, and
the existence of omitted variable bias. Thus, the lack of
consensus on the effect of employed variables on eco-
nomic growth is a major impetus for this study. Thus, this
study aims to unveil the effects of some determinants
(energy intensity, trade openness, CO2 emissions, and ur-
banization) on economic growth along the BRI route.
Environ Sci Pollut Res
These variables were chosen based on the following
rationale.
Energy usage plays a pivotal role in sustainable economic
growth (Muhammad 2019). Zhang et al. (2019) argue that the
BRI economies can achieve the needed sustainable economic
growth if there is an increase in energy consumption (renew-
able energy) across all economies along its route. The BRI, as
part of its plans, aims to promote energy infrastructure con-
nectivity, develop cross-border power supply networks and
power transmission routes, work together to ascertain the se-
curity of gas pipelines and oil and other transportation routes,
and collaborate on regional power grid upgrading and trans-
formation (Hafeez et al. 2019). Also, Zhang (2019) affirmed
that fossil fuels account for 84% of total energy consumption,
while renewable energy accounts for just 16% of the BRI’s
plan to achieve economic growth. Thus, the inclusion of en-
ergy intensity in this study as a determinant of economic
growth was critical. Another determinant of economic growth
is CO2 emissions (Mardani et al. 2019). Gozgor et al. (2018)
revealed that to attain economic height implies increasing en-
ergy consumption which turns to escalate CO2 emissions.
Abbasi et al. (2020) posit that the degradation of the ozone
layer and its associated global warming is on the ascendancy
primarily because of greenhouse gases (GHGs) produced by
burning fossil fuels all in the name of economic growth attain-
ment, which concurs with Wu et al. (2020) that fossil fuel (FF)
combustion provides approximately 90% of the energy re-
quirements along the BRI, thus the possibility of environmen-
tal degradation. However, Kasman and Duman (2015) stated
that CO2 emission is just a by-product of economic growth
and with time, there will be a balance between economic
growth and its associated emanations of CO2.
Shaheen et al. (2020) have argued that urbanization is a
determinant of economic growth. This concurs with the work
done by Bekhet and Othman (2017), who also posits that
increase in urbanization increases the level of economic activ-
ity, which turns to increase economic growth. Both economic
growth and urbanization are arguably interdependent, with
economic growth occurring without urbanization and vice
versa (Abban and Hongxing 2021). However, it is unclear if
these economic growth and urbanization are causally related
(Nathaniel and Bekun 2021). Furthermore, Nathaniel and
Bekun (2021) argued that economic growth is not only a
product of urbanization but also a source of it. The global
urban population has grown from 30% in 1950 to about
55% in 2018, and this increase was attributed to the economic
growth of nations (Statista 2018). With cities accounting for
more than 80% of global GDP (Hanif 2018), urbanization
would lead to long-term economic growth if it is well-
managed by enhancing competitiveness and encouraging in-
novation and new ideas. Thus, the issue of whether urbaniza-
tion promotes economic growth or vice versa, or whether they
are mutually exclusive, remains unanswered. Intending to
promote trade among economies involved in the BRI, it is
important to understand the effect of trade on economic
growth (Chen et al. 2019b). The addition of this variable is
to lay a foundation for further study on trade’s impact on the
economic growth of BRI economies, as well as institutions
and policies needed to maximize the benefit of BRI (Zhang
et al. 2019). With the help of the UN Comtrade database, we
quantify the weight of 60 BRI economies in global trade. The
trade data show that BRI economies accounted for 39% of
world trade in 2017, whereas intra-regional trade between
Central Asia, East-Asia, Europe, and Pacific accounted for
about 80% of the total trade along the BRI economies in
2017. Thus, as intra-regional trade rises, it is expected that
economic growth along the BRI route increases.
Based on the above highlights, the current study explores
the effects of energy consumption, CO2 emissions, trade, and
urbanization on economic growth. This study is complemen-
tary to existing knowledge by accounting for other covariates
like energy consumption, urbanization, CO2 emissions, trade,
and economic growth in the regional classification of BRI
countries in the presence of labor and gross capital formation.
As a result, this study aims to contribute to the existing liter-
ature along the BRI route, which has previously been recorded
in two ways:
(i) In terms of scope, this study, to the fullest of the authors’
knowledge, is among the few to examine the employed
variables across regional integration. In addition, the
study discusses the problems and opportunities for trade,
energy efficiency, environmental degradation, and sus-
tainable growth along the BRI.
(ii) In terms of methodology, cross-sectional dependence
and slope homogeneity are well-known problems in pan-
el econometrics, which some previous studies have
failed to address. As a result, in the study’s econometric
modeling, these issues are addressed. The study uses the
recent panel estimators to ensure consistent and accurate
results that are useful for decision-making along the rel-
evant BRI countries.
The remaining sections are as follows: literature review in
the “Literature review” section, exploratory data analysis and
model specification in the “Exploratory data analysis and
model specification” section, and empirical results in the
“Empirical results” section, followed by discussion in the
“Discussion” section and then finally the “Conclusion” sec-
tion with the conclusion and policy implication.
Literature review
Numerous studies have been done in investigating the rela-
tionship between economic growth and energy consumption

since the pioneering studies (Akarca and Long II 1979; Kraft
and Kraft 1978). The results from these studies can be grouped
into four hypotheses. The first hypothesis is known as the
growth hypothesis, and it is supported by a unidirectional
causality from energy consumption to economic growth.
The second hypothesis, known as the feedback hypothesis,
states that a two-way causal liaison exists between economic
growth and energy consumption. The third hypothesis known
as the conservation hypothesis implies that there is an evi-
dence of a unidirectional causal liaison from economic growth
to energy consumption. Finally, the neutrality hypothesis re-
vealed that no causal affiliation exists between economic
growth and energy consumption.
Growth hypothesis
Ajmi and Inglesi-Lotz (2020) investigated the relationship
between biomass energy consumption and economic for
26 OECD countries from 1980 to 2013. By employing the
panel VECM G ranger causality to examine the
relationship, they revealed the existence of a
unidirectional affiliation from energy use to economic
growth in OECD. Saad and Taleb (2018) also applied
the Granger causality test to investigate the relationship
between economic growth and energy consumption in
European Union from 1990 to 2014. The results obtained
from the Granger causality revealed that a one-way cau-
sation effect exists from energy consumption to economic
growth in Europe. Bouyghrissi et al. (2021) examined the
relationship between renewable energy consumption and
economic growth in Morocco from 1990 to 2014 by
employing the Granger causality test and the auto-
regressive distributed lag model approach. It was evi-
denced from their results that there exists a unidirectional
causation effect from renewable energy consumption to
economic growth in Morocco. Armeanu et al. (2021) ex-
amined the multidimensional linkage between economic
growth and urbanization across different income group-
ings from 1990 to 2014 by employing the Granger test.
They stated from their empirical results that a unidirec-
tional causation effect exists from urbanization to eco-
nomic growth in high and upper middle-income countries.
Stamatiou et al. (2021) also examined the relationship
amidst economic growth and trade from 2000 to 2017
for Greece by employing the vector error correction mod-
el (VECM) and the Granger causality test. They revealed
that a one-way causal liaison exists from trade to econom-
ic growth in Greece. Chen et al. (2019b) examined the
relationship between CO 2 emissions and economic
growth in China from 1980 to 2014 by employing the
Granger causality approach. They also revealed that a
unidirectional affiliation from CO 2 emissions to
economic growth exists in China.
Environ Sci Pollut Res
Bidirectional hypothesis
Likewise did Baz et al. (2021) examined the nexus between
energy consumption and economic growth from 1980 to 2017
in Pakistan using a non-linear autoregressive distributed lag
and asymmetric causality approaches. They revealed that a
feedback causality was observed between economic growth
and energy consumption. Munir et al. (2020) studied the rela-
tionship between energy consumption and economic growth
in the Association of Southeast Asian Nations (ASEAN-5)
countries from 1980 to 2016. They utilized the Granger cau-
sality test and revealed that a bidirectional causation exists
between energy use and economic growth in five countries
employed. Akadiri et al. (2020) examined the relationship
between trade and economic growth for 25 African countries
from 1980 to 2018 using the panel bootstrapping co-
integration technique. The results from the Granger causality
revealed a bidirectional trade and economic growth. Wasti and
Zaidi (2020) investigated the relationship between trade and
economic growth in Kuwait from 1971 to 2017 using aug-
mented Dicky-Fuller and Phillips-Perron methods together
with the Granger causality. Their empirical results revealed
that a bidirectional affiliation exists between trade and
economic growth. Iheonu et al. (2021) investigated the rela-
tionship between economic growth and CO2 emissions in
SSA from 12 using the panel quantile regression analysis.
The empirical evidence from their study revealed that a bidi-
rectional effect exists between economic growth and environ-
mental sustainability (CO2). Topcu et al. (2020) examined the
relationship between urbanization and economic growth in
124 countries using panel vector autoregressive (PVAR) ap-
proach from 1980 to 2018. They revealed that a bidirectional
affiliation exists between urbanization and economic growth
in high, upper middle, and lower middle-income countries.
Unidirectional hypothesis
Abban et al. (2020) investigated the relationship between en-
ergy intensity, economic growth, and CO2 emissions in 44
BRI countries from 1990 to 2018 by using the AMG
estimation approach. Evidence from their empirical findings
indicated that there exists a unidirectional causality effect
from economic growth to energy intensity in high and lower
middle income. Mohsin et al. (2021) assessed the impact of
transition from non-renewable energy to renewable energy on
economic growth in 25 Asian economies from 2000 to 2016
by employing robust random effect and Hausman Taylor re-
gression. Evidence from their results indicated that the con-
servation hypothesis exists. Thus, a one-way causation liaison
exists from economic growth to energy consumption.
Ivanovski et al. (2021) also study the effect of renewable
and non-renewable energy consumption on economic growth
from 1990 to 2015 in both non-OECD and OECD countries
Environ Sci Pollut Res
by employing the local linear dummy variable estimation ap-
proach. They revealed the existence of the conservation hy-
pothesis and concluded that a one-way causation effect exists
from economic growth to both renewable and non-renewable
energy consumption in all panel groupings. Asiedu et al.
(2021) study the relationship between trade, economic
growth, and environmental degradation in Belgium, the
USA, and Canada using panel data from 1995 to 2016 by
employing the ARDL approach. They revealed the existence
of the conservation hypothesis; thus, a unidirectional effect
exists from economic growth to trade in all countries. Kong
et al. (2021) examined the impact of trade on sustainable eco-
nomic growth in China by using the ARDL model from 1994
to 2018. They stated that a unidirectional affiliation from eco-
nomic growth to trade exist, thus the confirmation of the con-
servation hypothesis. Anwar et al. (2020) examined the im-
pact of urbanization, CO2 emissions, and economic growth in
eastern Asian countries from 1980 to 2017. They also
confirmed the existence of the conservation hypothesis.
Neutrality hypothesis
Sunde (2020) examined the relationship between energy
consumption and economic growth for SADC countries
from 1971 to 2015 by employing the Granger causality test.
The empirical evidence from their study revealed that the
neutrality hypothesis exists between energy consumption
and economic growth in SADC. Nathaniel and Bekun
(2021) examined the relationship between urbanization, elec-
tricity consumption, and economic growth in Nigeria from
1971 to 2014 by using the bounds, Bayer and Hanck, and
vector error correction model Granger causality test. Their
empirical results revealed the presence of the neutrality
hypothesis between urbanization and economic growth in
the short run. Gozgor et al. (2018) also examined the relation-
ship between energy consumption and economic growth in 29
OECD countries by using the ARDL and panel quantile
regression approaches. Evidence from their study revealed
the existence of the neutrality hypothesis between energy
consumption and economic growth in the panel dataset for
the 29 countries. Mikayilov et al. (2018) also examined the
impact of economic growth on CO2 emissions in Azerbaijan
from 1992 to 2013 by employing the DOLS/FMOLS. They
tested the presence of EKC in Azerbaijan and confirmed the
existence of the inverted U-shaped hypothesis. However, the
neutrality hypothesis was confirmed between CO2 emissions
and economic growth.
Overall, our evaluation of the literature revealed that prior
study’s empirical findings are inconclusive. One possible rea-
son could be that prior studies did not take into account the
relationship between economic growth, energy consumption,
urbanization, trade, and CO2 emissions. Thus, in this study,
this void was addressed by applying recent panel estimators to
a panel dataset for 81 BRI economies, taking into account
their regional groupings.
Exploratory data analysis and model
specification
Descriptive statistics
Currently, the BRI constitutes 138 states. Table 1 revealed that
the study selected 81 countries as a result of data availability
from 1990 to 2018 and grouped them into their regional clas-
sification. The selected variables, definition, abbreviation, and
sources are presented in Table 2. Comparatively from Table 3,
per capita income is relatively high in Europe compared to the
other regions, with SSA having the lowest per capita income.
Inferring to the values of kurtosis and skewness, none of the
variables followed the normal distribution. The Jarque-Bera
(JB) normality test is used to attest the kurtosis and skewness
test of normality, with the probability of rejection less than
0.05. The tolerance values and variance inflation factor (VIF)
are used to ascertain the multicollinearity between variables.
Since the values of VIF are less than 5 and the values of
tolerance are greater 0.2, it can be reasoned that each indepen-
dent variable has a unique effect on the response variable.
Lastly, the Pearson product correlation in Table 4 revealed
that there was no strong association among the factors of eco-
nomic growth under study since the coefficient of correlation
was less than 0.7.
Model specification
With the aim of establishing the nexus among GDP, ENI,
CO2, EXP, and URB, this empirical analysis adopted the neo-
classical Solow growth model with the Cobb-Douglas produc-
tion function framework which is modeled as:
GDPit ¼ A*it f ðGCF it ; LABit Þ ð1Þ
where GDPit denotes real income (GDP per capita), Ait
stands for technology parameter, GCFit is real capital stock,
and LABit represents labor. The Solow (1956) neoclassical
Solow growth model originally does not treat trade, urbaniza-
tion, carbon dioxide emissions, and energy use as production
factors, but rather treats the economy as a closed system in
which goods are supplied by capital and labor inputs. Thus,
the Cobb-Douglas function for finding the relationship be-
tween performance and economic factors in this study was
formulated as below:
GDPit ¼ A*it GCF αit LABβit ð2Þ
 Environ Sci Pollut Res

Table 1 List of selected countries

Regional panel classification Selected countries

East Asia and Central Asia (EACA)
Middle East and North Africa (MENA)
South America and Pacific (SAAP)
Southeast And South Asia (SESA)
Sub-Saharan Africa (SSA)
Europe (Europe)
China, Kazakhstan, Korea, Rep., Kyrgyz Republic, Mongolia, Tajikistan, Uzbekistan
Algeria, Bahrain, Egypt, Israel, Libya, Morocco, Oman, Saudi Arabia, Tunisia, Iraq, Jordan
Chile, Costa Rica, New Zealand, Ecuador, El Salvador, Jamaica, Panama, Peru,
Brunei, Malaysia, Bangladesh, Cambodia, India, Indonesia, Myanmar, Nepal, Pakistan,
Philippines, Singapore, Sri Lanka, Vietnam
Angola, Benin, Cameroon, Congo, Rep., Cote d'Ivoire, Gabon, Ghana, Kenya, Mozambique,
Namibia, Niger, Nigeria, Senegal, Tanzania, Togo, Zambia, Zimbabwe
Albania, Austria, Azerbaijan, Belarus, Bulgaria, Croatia, Cyprus, Czech, Greece, Hungary,
Italy, Malta, Moldova, Latvia, Lithuania, Luxembourg, Poland, Portugal, Romania, Russia,
Slovak Republic, Serbia, Slovenia, Turkey, Ukraine

where the estimates of labor and physical capital stock are
measured by α and β, respectively. Therefore, our designated
economic growth model was based on energy use, CO2 emis-
sions, trade, urbanization, physical capital stock, and labor.
Thus, Eq. 2 can be expanded as:
GDPit ¼ Ait GCF αit LABβit CO2it ENI γit EXP∅ φ
it URBit
where ENI is energy usage, CO2 is carbon dioxide emis-
sions, EXP represents exports of goods, and URB is urbani-
zation. α, β, γ, ∅ , and φ explain the output of capital stock,
labor, CO2 emissions, energy use, urbanization, and trade,
respectively. All variables are included in this study with the
exception of Ait which was not observed.
LnGDPit ¼ LnAit þ β1 LnGCF it þ β2 LnLAF it
þ β3 LnENI it þ β4 LnCO2it þ β 5 LnEXPit
þ þβ 6 LnURBit
Thus, LnAit = β0 + εit, where β0 measures the average ef-
ficiency level across the cross-sections and over a period and
εit is the deviation from the mean. Therefore, the above equa-
tion was rewritten as:
LnGDPit ¼ β0 þ β 1 LnENI it þ β3 LnEXPit þ β 4 LnCO2it
þ LnURBit þ εit β 2 LnGCF it þ β5 LnLAF it
þ β6 ð5Þ
where the coefficient of the slope is β0, t stands for the
ð3Þ period of study, i points to each country selected in the study
(1, 2, N), and error term is given by εit. The coefficients for
ENI, EXP, CO2, URB, GCF, and LAF are represented by β1
− β6, respectively.
Analytical procedure
In order to specify the effects of the exploratory variables on the
dependent variables, the following process was undertaken: (1)
Various cross-sectional dependency test (Breusch-Pagan LM,
Pesaran scaled LM, Pesaran CD, bias-corrected scaled LM, and
ð4Þ Friedman) together with the Pesaran and Yamagata (2008) ho-
mogeneity test were performed to substantiate the existence of
cross-sectional dependency and heterogeneous slopes in the
panels. (2) The confirmation of cross-sectional reliance and
the heterogeneity in slope led to the usage of CADF and
CIPS unit roots test suggested by Pesaran (2007) to determine
the stationarity of the employed variables. (3) In order to

Table. 2 Variables’ description and data source

Variable Definition Abb. Period Source

Economic growth GDP per capita (constant 2010 US$) GDP 1990–2018 WDI
Trade Export of goods (current US $) provided to the rest of the world TRD 1990–2018 WDI
Energy intensity Energy consumption per capital (kg of oil equivalent) ENI 1990–2018 WDI
Carbon dioxide emissions CO2 emitted from fossil consumption in kilotons CO2 1990–2018 WDI
Urbanization Urbanization, total urban population URB 1990–2018 WDI
Labor force Labor force, total LAB 1990–2018 WDI
Gross capital formation Gross capital formation (current US$) GCF 1990–2018 WDI

Note: WDI World Bank Development Indicators

Environ Sci Pollut Res

Table 3 Descriptive statistics

Regional Variable Mean Std.Dev Skewness Kurtosis JB test VIF Tolerance

EACA GDP 4970.354 6601.677 2.000 6.280 234.226a 1.734 0.401

ENI 1893.337 1443.227 0.855 2.600 27.025a 2.081 0. 334
LAB 1.13E+08 2.58E+08 2.055 5.263 192.701a 2.161 0.377
POP 1.181250 0.796435 −0.902 5.140 68.561a 1.603 0.472
GCF 26.68447 8.459802 0.072 2.819 560.74a 1.918 0.547
TRD 1.89E+11 4.75E+11 3.371 13.892 143.91a 3.419 0.731
URB 88517107 2.01E+08 2.429 7.573 389.55a 4.021 0.438
MENA GDP 10431.28 143.352 0.808 2.343 41.88a 3.044 0.280
ENI 2722.521 2955.106 1.784 5.478 259.58a 2.379 1.186
LAB 6387585. 6637930. 1.759 6.028 296.47a 3.086 0.245
POP 2.439873 1.379300 1.548 5.5272 219.75a 2.093 0.577
GCF 21.84189 7.068707 −0.344 3.931 18.488 2.328 0.791
TRD 3.55E+10 5.78E+10 3.803 19.399 443.69a 1.304 0.190
URB 12308379 10253456 0.839 2.797 39.35a 2.388 0.351
SAAP GDP 9159.204 9118.255 2.009 5.845 242.53a 1.732 0.112
ENI 1310.739 1139.596 1.826 4.978 172.49a 3.221 1.024
LAB 4497837. 4227460. 1.596 4.843 135.98a 1.649 0.846
POP 1.326825 0.567465 0.157 2.092 9.214b 1.889 0.730
GCF 21.79487 4.720225 1.364 6.709 212.16a 3.984 1.052
TRD 1.67E+10 1.93E+10 1.507 4.430 111.36a 3.460 0.744
URB 7034729. 6538934. 1.194 3.199 57.49a 2.635 0.532
SESA GDP 7444.971 13545.06 2.096 6.105 442.42a 2.050 0.755
ENI 1429.234 2212.031 2.020 5.849 397.37a 2.551 0.826
LAB 59319519 1.10E+08 2.922 10.461 149.70a 1.924 0.733
POP 1.657920 0.768146 0.526 4.657 62.641a 1.155 0.836
GCF 24.01301 6.674034 0.294 2.730 6.795c 1.231 0.890
TRD 6.02E+10 9.54E+10 2.263 7.944 730.35a 3.990 0.222
URB 49204426 90567415 2.943 11.243 167.67a 1.255 0.326
SSA GDP 1987.485 2310.644 2.657 9.731 156.19a 1.027 0.475
ENI 507.4638 389.3552 3.538 19.694 698.70a 2.135 0.699
LAB 8715044. 108089 2.784 11.194 205.93a 1.751 0.544
POP 2.705225 0.602513 −1.013 5.768 250.11a 1.386 0.327
GCF 21.89387 8.955119 1.650 10.147 137.43a 1.270 0.427
TRD 6.56E+09 1.42E+10 4.167 21.434 868.21a 1.150 0.756
URB 8689382. 140393 4.165 22.204 931.81a 2.992 0.695
Europe GDP 16938.08 19287.20 2.919 12.900 412.21a 1.560 0.937
ENI 2673.715 1465.493 2.084 9.136 1719.734 1.273 0.910
LAB 8971233. 1524519 3.190 13.575 477.51a 1.065 0.648
POP 0.093467 0.881261 0.445 4.198 69.718 2.773 0.308
GCF 22.47786 5.359089 0.887 7.167 641.57a 1.250 0.487
TRD 6.03E+10 9.73E+10 2.833 11.739 339.40a 3.028 0.352
URB 13155097 228501 2.955 11.829 327.67a 2.576 1.003

Note: a, b, and c represent statistical significance at 1%, 5%, 10% level respectively

determine the long-term connection among the variables, the The pooled mean group (PMG) formulated by Pesaran
Westerlund and Edgerton (2007) test was carried out. (4) The et al. (1999) was used to determine the short- and long-run
long-term and short-run effects of the exploratory variables on estimates of the employed explanatory variables on the re-
the response variable were obtained with the PMG estimators. sponse variable. The PMG permits the short-term parameters
 Environ Sci Pollut Res

Table 4 Pearson correlation analysis

Variable Test GDP ENI LAB POP GCF TRD URB

GDP Pearson corr. Sig.(2-tailed) 1 0.303a (0.000) 0.517a (0.000) −0.273a (0.000) 0.416a (0.000) 0.353a (0.000) 0.275a (0.000)
ENI Pearson corr. Sig.(2-tailed) 1 −0.336a (0.000) 0.272a (0.000) −0.412b (0.040) 0.016a (0.000) −0.512a (0.000)
LAB Pearson corr. Sig.(2-tailed) 1 −0.097b (0.011) 0.422a (0.000) −0.146a (0.000) 0.087a (0.000)
POP Pearson corr. Sig.(2-tailed) 1 0.260a (0.007) 0.102a (0.000) −0.479b (0.000)
GCF Pearson corr. Sig.(2-tailed) 1 −0.532a (0.000) −0.069b (0.012)
TRD Pearson corr. Sig.(2-tailed) 1 −0.317a (0.000)
URB Pearson corr. Sig.(2-tailed) 1

Note: a, and b represent statistical significance at 1%, 5% level respectively

m n n
to differentiate between the groups, whereas the long-term coef- ɸi ¼ −1 þ ∑ λij ; αi ¼ ∑ δij ; λ*ij ¼ ∑ λip þ; j
ficients are assumed to be equal between groups. The PMG j¼1 j¼1 j¼1

estimator again embraces heterogeneity in the slope-intercept, ¼ 1; 2; …m−1

short-term coefficient, and error variance in between groups,
n
while it observes uniformity in the long-term slope coefficient. b
δij ¼ ∑ b
δip
More interestingly, the PMG is applicable in cases where the p¼ jþ1

employed variables are I (1) or I (0). Ultimately, the Hausman

poolability test was used to ascertain whether pooling long-term
coefficients were effective and appropriate. Considering an
ARDL(p,q) model, where the lag order of the response variable
is given by p, while q indicates the lag order of the independent
variables, then the expression of the model is given by:
p q 0
yit ¼ ∑ λij yi:t− j þ ∑ δij xi:t− j þ εi;t
j¼1 j¼1
where i = 1, 2, ……N stands for the individual countries
0 on the other hand indicates coefficients in the long term which
and t = 1, 2, …T is the periods, λij is a scalar vector, δij is a k −
1 vector for the coefficients of the independent variables, xi. t −
j represents k − 1 vector of explonatory variables, yit indicates
the response variable, and εi, t indicates the error terms. The
error correction model of Equation 15 under the equilibrium
state is expressed as:
0 m−1 m−1 0
Δyi:t ¼ ɸi yi:t þ αi xit þ ∑ λ*ij Δyi:t− j þ ∑ δ*ij Δxi:t− j þ εi:t ð7Þ
j¼0 j¼o
Thus, in regrouping Eq. 7, Eq. 8 was obtained:
 0
 m−1 m−1 0
Δyi:t ¼ ɸi yi:t þ θi xit þ ∑ λij Δyi:t− j þ ∑ δ*ij Δxi:t− j
j¼0 j¼0
þ εi:t ð8Þ
ð6Þ ɸ′s indicates the error correction terms, δ*ij shows parame-
ters in the short run, θi interprets the long-run association
among the response (yi. t) and exploratory variables (xit). δij
are concerned with the long-term causalities between the de-
pendent variables and their corresponding explanatory vari-
ables. The short-term causalities from the explanatory vari-
ables to the dependent variables are described by the short-
run parameters. They are expected to be negative and signif-
icant, indicating a long-term relationship among the variables.
The rate of adjustment is calculated according to the inverse
ratio of the absolute value of the error correction terms. Hence,
we constructed the modified model in Eq. (5) as ARDL model
in the following format:

h 0  i m−1 0
ΔGDPi;t ¼ β0 þ ɸ1;i GDPi;t−1 −θ1:i ENI i:t þ CO2;i:t þ TRDi:t þ URBi:t þ LABi:t þ GCF i:t þ ∑ δ*ij ΔGDPi;t− j
j¼0

m−1 0 m−1 0 m−1 0 m−1 0 m−1 0

þ ∑ δ*ij ΔENI i;t− j þ ∑ δ*ij ΔCO2;i;t− j þ ∑ δ*ij ΔTRDi;t− j þ ∑ δ*ij ΔURBi;t− j þ ∑ δ*ij ΔLABi;t− j
j¼0 j¼0 j¼0 j¼0 j¼0

m−1 0
þ ∑ δ*ij ΔGCF i;t− j þ εi:t ð9Þ
j¼0
Environ Sci Pollut Res

h 0  i m−1 0
ΔENI i;t ¼ β1 þ ɸ2;i ENI i;t−1 −θ2:i GDPi:t þ CO2;i:t þ TRDi:t þ URBi:t þ LABi:t þ GCF i:t þ ∑ δ*i j ΔGDPi;t− j
j¼0

m−1 0 m−1 0 m−1 0 m−1 0 m−1 0

þ ∑ δ*ij ΔENI i;t− j þ ∑ δ*ij ΔCO2;i;t− j þ ∑ δ*ij ΔTRDi;t− j þ ∑ δ*ij ΔURBi;t− j þ ∑ δ*ij ΔLABi;t− j
j¼0 j¼0 j¼0 j¼0 j¼0

m−1 0
þ ∑ δ*ij ΔGCF i;t− j þ εi:t ð10Þ
j¼0

h 0
i m−1 0
ΔCO2;i;t ¼ β3 þ ɸ3;i CO2;i;t−1 −θ3:i ðGDPi:t þ ENI i:t þ TRDi:t þ URBi:t þ LABi:t þ GCF i:t Þ þ ∑ δ*ij ΔGDPi;t− j
j¼0

m−1 0 m−1 0 m−1 0 m−1 0 m−1 0

þ ∑ δ*ij ΔENI i;t− j þ ∑ δ*ij ΔCO2;i;t− j þ ∑ δ*ij ΔTRDi;t− j þ ∑ δ*ij ΔURBi;t− j þ ∑ δ*ij ΔLABi;t− j
j¼0 j¼0 j¼0 j¼0 j¼0

m−1 0
þ ∑ δ*ij ΔGCF i;t− j þ εi:t ð11Þ
j¼0

h 0  i m−1 0
ΔTRDi;t ¼ β4 þ ɸ4;i TRDi;t−1 −θ4:i ENI i:t þ CO2;i:t þ GDPi:t þ URBi:t þ LABi:t þ GCF i:t þ ∑ δ*ij ΔGDPi;t− j
j¼0

m−1 0 m−1 0 m−1 0 m−1 0 m−1 0

þ ∑ δ*ij ΔENI i;t− j þ ∑ δ*ij ΔCO2;i;t− j þ ∑ δ*ij ΔTRDi;t− j þ ∑ δ*ij ΔURBi;t− j þ ∑ δ*ij ΔLABi;t− j
j¼0 j¼0 j¼0 j¼0 j¼0

m−1 0
þ ∑ δ*ij ΔGCF i;t− j þ εi:t ð12Þ
j¼0

h 0  i m−1 0
ΔURB ¼ β5 þ ɸ5;i URBi;t−1 −θ5:i ENI i:t þ CO2;i:t þ TRDi:t þ GDPi:t þ LABi:t þ GCF i:t þ ∑ δ*ij ΔGDPi;t− j
j¼0

m−1 0 m−1 0 m−1 0 m−1 0 m−1 0

þ ∑ δ*ij ΔENI i;t− j þ ∑ δ*ij ΔCO2;i;t− j þ ∑ δ*ij ΔTRDi;t− j þ ∑ δ*ij ΔURBi;t− j þ ∑ δ*ij ΔLABi;t− j
j¼0 j¼0 j¼0 j¼0 j¼0

m−1 0
þ ∑ δ*ij ΔGCF i;t− j þ εi:t ð13Þ
j¼0

h 0  i m−1 0
ΔLABi;t ¼ β6 þ ɸ6;i LABi;t−1 −θ6:i ENI i:t þ CO2;i:t þ TRDi:t þ URBi:t þ GDPi:t þ GCF i:t þ ∑ δ*ij ΔGDPi;t− j
j¼0

m−1 0 m−1 0 m−1 0 m−1 0 m−1 0

þ ∑ δ*ij ΔENI i;t− j þ ∑ δ*ij ΔCO2;i;t− j þ ∑ δ*ij ΔTRDi;t− j þ ∑ δ*ij ΔURBi;t− j þ ∑ δ*ij ΔLABi;t− j
j¼0 j¼0 j¼0 j¼0 j¼0

m−1 0
þ ∑ δ*ij ΔGCF i;t− j þ εi:t ð14Þ
j¼0

h 0  i m−1 0
ΔGCF i;t ¼ β7 þ ɸ7;i GCF i;t−1 −θ7:i ENI i:t þ CO2;i:t þ TRDi:t þ URBi:t þ LABi:t þ GDPi:t þ ∑ δ*ij ΔGDPi;t− j
j¼0

m−1 0 m−1 0 m−1 0 m−1 0 m−1 0

þ ∑ δ*ij ΔENI i;t− j þ ∑ δ*ij ΔCO2;i;t− j þ ∑ δ*ij ΔTRDi;t− j þ ∑ δ*ij ΔURBi;t− j þ ∑ δ*ij ΔLABi;t− j
j¼0 j¼0 j¼0 j¼0 j¼0

m−1 0
þ ∑ δ*ij ΔGCF i;t− j þ εi:t ð15Þ
j¼0
 Environ Sci Pollut Res

Empirical results variables. Considering the test statistics Gτ, Gα, Pτ and Pα, the
alternate hypothesis was accepted at the various significance
Cross-sectional correlation test results levels. The robust p-value, as seen in Table 8, which offers clear
evidence for co-integration, was the basis for decision-making.
Table 5 indicates the results from the cross-section reliance
test. The null hypothesis of cross-sectional independency was
rejected based of the findings from the different tests. As a
Parameter estimation
result, it was deducted that there are sufficient grounds for
Having inferred co-integration among the variables, it was
cross-section correlation in the error terms among the vari-
necessary to determine estimates for the short term and long
ables in the panel groupings. As a result, cross-sectional de-
term and again analyze the causalities. To be able to employ
pendency was taken into account in the econometric
the best estimator, the Hausman test was used as required by
estimations.
literature to determine the proper estimator for the model. The
Hausman test was used to confirm the hypothesis of long-term
Heterogeneity of slope test results
homogeneity; hence, it was reasoned that the PMG estimator
was more effective. Per the results obtained from the PMG
Disregarding heterogeneity of slope coefficients can result in
estimator, the estimate of error correction terms of all variables
distorted inferences and imprecise estimates. Thus, by
(ECTs) has expected signs indicating statistical significance at
employing the Pesaran and Yamagata (2008) test in accession
the 1% level. Of interest in this study is the effect of the
making, Table 6 indicates the acceptance of the alternative
explanatory variables on economic growth and its causation.
hypothesis of heterogeneity in the slope coefficient. On this
foundation, robust estimators for cross-sectional reliance and
heterogeneous problems were utilized. Long- and short-run estimates for EACA

Panel unit root test results
Table 7 exhibits the findings from the unit root test. The find-
ings unveiled that the null hypothesis of unit root is recog-
nized irrespective of the time trend and levels. The seven
variables were stable at the various significance levels of
1%, 5%, and 10% after the first difference. Thus, in econo-
metrics, it is deduced that the variables were of order 0, I (0)
and then order 1, I (1). This then offers the possibility of
further analysis of the long-term equilibrium relationship
among the variables. As stated by Abban et al. (2020), vari-
ables have to be stable to obtain efficient estimates.
Co-integration test results
The Westerlund and Edgerton (2007) co-integration was
employed in evaluating the long-run relationship between the
The PMG results for the EACA in Table 9 indicates that a 1%
increase in ENI, CO2, GCF, EXP, and URB turns to increase
GDP by 0.725%, 0.871%, 0.276%, 2.610%, and 0.642%, re-
spectively, in terms of the long-run estimations. However, for
the short-run estimates, a percentage increase in ENI, LAB,
CO2, EXP, and URB steps up GDP by 0.503%, 0.110%,
0.148%, 0.308%, and 0.315%, respectively, whereas LAB
and GCF had no significant impact on GDP. In regard to the
causation effect using the PMG estimator, it was revealed that
in the long run, a bidirectional causal effect exists between
ENI-GDP, GDP-EXP, and GDP-URB, whereas a one-
directional causal effect from CO2 to GDP and from GCF to
GDP. However, in the short run, a one-way causation effect
was observed from ENI to GDP, from CO2 to GDP, from EXP
to GDP, and from URB to GDP. The inclusion of labor force
and physical capital stock is a critical share of this study in
order to address bias problems with regard to omitted

Table 5 Cross-sectional dependency results

Test statistics EACA MENA SAAP SESA SSA EUROPE

Value Prob. Value Prob. Value Prob. Value Prob. Value Prob. Value Prob.

BP-LM test 21.72a 0.000 166a 0.000 66.02a 0.000 366a 0.000 659.2a 0.000 554.7a 0.000
CDLM test 12.963a 0.000 6.385a 0.000 1.985b 0.047 12.98a 0.000 16.37a 0.000 7.089a 0.000
CDLM Adj. test 11.479a 0.009 17.16a 0.000 7.207a 0.000 42.83a 0.000 58.84a 0.000 9.905a 0.000
CDP test 9.371a 0.000 3.592a 0.003 8.954a 0.000 16.349a 0.000 16.623a 0.000 18.214a 0.000
Friedman test 74.252a 0.000 48.935a 0.000 83.603a 0.000 109.25a 0.000 141.24a 0.000 43.270a 0.000

Note: a, and b represent statistical significance at 1%, 5% level respectively

Environ Sci Pollut Res
Table 6 Heterogeneity of slope test results
Test statistics EACA MENA
Value Prob. Value Prob.
b)
Delta tilde (Δ 41.34a 0.000 57.09a 0.000
b)
Adj. Delta tilde (Δ 23.75a 0.000 32.82b 0.000
Note: a represent statistical significance at 1% level respectively
variables. Finally, the value of the ECTs from the PMG estimator
unveiled that GDP, ENI, CO2, EXP, and URB are statistically
significant with their corresponding adjustment rate given by
3.60, 2.77, 3.32, and 2.40 years, respectively. This indicates a
quick long-run equilibrium deviation by the variables. The
Haussmann test concludes that at a 1% level of significance, it
is difficult to decline the homogeneous restriction in long-term
equilibrium, indicating that the PMG estimator is suitable and
accurate for estimating the pooling long-term coefficients.
Long- and short-run estimates for MENA
For the MENA countries, the long-run estimates from the
PMG estimation in Table 10 indicate that a unit increase in
ENI, LAB, CO2, EXP, and URB steps up GDP by 0.578%,
0.215%, 0.109%, 0.697%, and 0.411%, respectively. For the
short run, the estimates revealed that a percentage increase in
ENI, LAB, GCF, and EXP turns to speed up GDP by 0.257%,
1.158%, 0.027%, and 2.948%, respectively. However, no sig-
nificant effect of CO2 and URB was felt in the short run. In
estimating the causal affiliation, it was revealed that in the
long run, a bidirectional causation affiliation was observed
between ENI-GDP, GDP-CO2, and URB-GDP, with a unidi-
rectional causation effect which has been felt from LAB to
GDP and from EXP to GDP. In the case of the short run, a
one-way causation affiliation was observed from LAB to
GDP, from GCF to GDP, and from EXP to GDP, with a
two-way causation impact between ENI and GDP. Inferring
from the PMG estimator, the ECTs of the employed variables
are statistically significant, that is, their corresponding adjust-
ment rate of GDP, ENI, CO2, EXP, and URB is given by 3.50,
1.16, 1.27, 3.82, and 3.13 years. Thus, it was inferred that a
quick long-run equilibrium deviation is shown by the
employed variables. Lastly, according to the Haussmann test,
it is difficult to decline the homogeneous restriction in long-
term equilibrium at a 1% level of significance, suggesting that
the PMG estimator is suitable and reliable for estimating the
pooling long-term coefficients.
Long- and short-run estimations for SAAP
For the SAAP countries in Table 11, the PMG estimation
for the short run revealed that a percentage increase in
SAAP SESA SSA EUROPE
Value Prob. Value Prob Value Prob. Value Prob.
28.509a 0.000 31.02a 0.000 52.76a 0.000 4567 7654
9.07a 0.000 19.75a 0.000 34.06a 0.000 28.71a 0.000
ENI, CO2, GCF, and EXP increases GDP by 0.266%,
0.219%, 0.315%, and 0.142%, respectively. The long-
run estimates indicate that a unit increase in ENI, LAB,
CO2, EXP, and URB correspondently increases GDP by
0.574%, 0.428%, 0.039%, 0.689%, and 0.503%, respec-
tively. Considering the causal affiliation between the ex-
planatory variables and GDP, it was observed that in the
long term, a bidirectional causation effect was observed
between ENI-GDP, CO2-ENI, and EXP-GDP, with a one-
way causation affiliation from LAB to GDP and from
URB to GDP. For the short run, it was observed that a
two-way cause and effect relation was seen between
GDP-ENI, CO2-GDP, GCF-GDP, and URB-GDP, while
in the short run, a unidirectional causation affiliation was
seen from EXP to GDP and URB to GDP, with a bidirec-
tional causation effect between ENI and GDP. In regard to
the rate of adjustment among the employed variables, it
was indicated by the PMG estimator that GDP, ENI, CO2,
EXP, and URB have a rate of adjustment of 3.13, 2.24,
2.12, and 3.23 years. Once again for SAAP economies, a
quick long-run equilibrium deviation was shown by the
employed variables. Finally, the Haussmann test shows
that at a 1% level of significance, it is difficult to reject
the homogeneous restriction in long-term equilibrium, im-
plying that the PMG estimator is suitable and accurate for
estimating the pooling long-term coefficients.
Long- and short-run estimations for SESA
Looking at SESA economies in Table 12, the long-run estimates
revealed that a unit increase in ENI, CO2, EXP, and URB corre-
sponds to 0.351%, 0.413%, 1.312%, and 0.417%, respectively,
increase in GDP, whereas the short-run estimates indicate that a
unit increase in ENI, GCF, and EXP increases GDP by 0.063%,
0.019%, and 3.703%, respectively. Considering the causal affil-
iation, in the long run, a bidirectional causality affiliation between
CO2-GDP and EXP-GDP was observed, with a unidirectional
causation affiliation from LAB to GDP and from URB to GDP.
In the case of the short run, a bidirectional causality affiliation
between ENI-GDP, GCF-GDP, and EXP-GDP was seen, with
no causation affiliation between LAB-GDP and CO2-GDP.
Inferring to the rate of adjustment for the SESA countries, the
PMG estimator inferred that GDP, ENI, CO2, EXP, and URB
 Environ Sci Pollut Res

Table 7 Panel unit root test results

CIPS CADF

Levels First difference Levels First difference

Variables Constant Constant and Inf. Constant Constant and Inf. Constant Constant and Inf. Constant Constant and Inf.
trend trend trend trend
EACA
GDP −1.725 −1.314 I (0) −4.742a −5.004a I (1) −1.855 −1.072 I (0) −4.739a −4.687a I (1)
ENI −1.226 −1.681 I (0) −3.653a −3.815 a I (1) −1.612 −1.367 I (0) −3.422a −3.939a I (1)
LAB −0.756 −1.425 I (0) −3.270a −4.487a I (1) −1.288 −1.192 I (0) −4.040a −4.846a I (1)
POP −1.564 −1.088 I (0) −4.025a −3.606a I (1) −1.953 −1.615 I (0) −3.796a −5.328a I (1)
GCF −1.455 −1.597 I (0) −4.563a −4.546a I (1) −1.815 −1.026 I (0) −4.244a −4.088a I (1)
TRD −1.881 −1.838 I (0) −4.848a −5.278 a I (1) −1.693 −1.913 I (0) −5.132a −4.148a I (1)
URB −0.828 −1.199 I (0) −3.940a −5.024a I (1) −1.654 −1.302 I (0) −4.945a −4.281a I (1)
MENA
GDP −1.545 −1.630 I (0) −5.469a −5.470a I (1) −1.474 −1.382 I (0) −3.867a −4.899a I (1)
ENI −1.372 −1.719 I (0) −4.389a −4.469a I (1) −1.735 −1.233 I (0) −4.051a −5.064a I (1)
LAB −1.066 −1.277 I (0) −4.789a −5.259a I (1) −1.552 −1.551 I (0) −5.265a −4.538a I (1)
POP −1.598 −1.443 I (0) −4.904a −5.703a I (1) −1.323 −1.861 I (0) −4.708a −4.885a I (1)
GCF −1.191 −1.885 I (0) −5.428a −5.494a I (1) −1.908 −1.677 I (0) −4.036a −4.012a I (1)
TRD −1.005 −1.362 I (0) −4.787a −5.009a I (1) −1.801 −1.076 I (0) −3.959a −4.573a I (1)
URB −1.557 −1.687 I (0) −5.404a −4.345a I (1) −1.865 −1.137 I (0) −5.539a −5.187a I (1)
SAAP
GDP −1.610 −1.996 I (0) −5.603a −5.760a I (1) −1.086 −1.270 I (0) −4.696a −3.703a I (1)
ENI −1.811 −1.123 I (0) −4.876a −4.964a I (1) −1.062 −1.220 I (0) −4.852a −4.972a I (1)
LAB −1.381 −1.535 I (0) −4.083a −4.339a I (1) −1.678 −1.214 I (0) −5.105a −5.391a I (1)
POP −1.090 −1.439 I (0) −5.872a −4.695a I (1) −1.203 −1.270 I (0) −4.457a −4.699a I (1)
GCF −1.439 −1.867 I (0) −5.156a −5.062a I (1) −1.325 −1.851 I (0) −4.916a −4.910a I (1)
TRD −1.564 −1.715 I (0) −4.901a −4.969a I (1) −1.471 −1.555 I (0) −4.906a −4.727a I (1)
URB −1.417 −1.764 I (0) −5.106a −5.341a I (1) −1.949 −1.278 I (0) −4.838a −5.384a I (1)
SESA
GDP −1.443 −1.247 I (0) −5.019a −4.949a I (1) −1.066 −1.111 I (0) −5.011a −4.753a I (1)
ENI −0.932 −1.027 I (0) −5.401a −4.354a I (1) −1.359 −1.229 I (0) −4.416a −5.050a I (1)
LAB −1.348 −1.675 I (0) −4.754a −3.926a I (1) −1.790 −1.281 I (0) −4.606a −5.346a I (1)
POP −1.424 −0.840 I (0) −4.962a −5.220a I (1) −1.331 −1.218 I (0) −5.103a −4.908a I (1)
GCF −1.542 −1.370 I (0) −4.713a −4.777a I (1) −1.588 −1.395 I (0) −4.553a −4.589a I (1)
TRD −1.196 −1.427 I (0) −3.786a −4.351a I (1) −1.653 −1.668 I (0) −4.551a −4.034a I (1)
URB −1.020 −0.704 I (0) −4.592a −5.095a I (1) −1.267 −1.387 I (0) −5.065a −5.207a I (1)
SSA
GDP −1.712 −1.619 I (0) −5.292a −5.281a I (1) −1.549 −1.419 I (0) −4.653a −5.143a I (1)
ENI −1.074 −1.267 I (0) −4.605a −4.986a I (1) −1.249 −1.088 I (0) −5.314a −4.612a I (1)
LAB −0.612 −0.282 I (0) −5.432a −5.189a I (1) −1.682 −1.541 I (0) −5.220a −3.947a I (1)
POP −1.086 −1.017 I (0) −5.080a −5.172a I (1) −1.612 −1.143 I (0) −4.786a −4.968a I (1)
GCF −1.483 −1.389 I (0) −5.340a −5.415a I (1) −1.401 −1.105 I (0) −3.929a −5.877a I (1)
TRD −1.626 −1.046 I (0) −4.654a −4.787a I (1) −1.465 −2.000 I (0) −4.687a −4.054a I (1)
URB −1.603 −1.053 I (0) −4.710a −5.083a I (1) −1.503 −1.480 I (0) −4.932a −4.991a I (1)
Europe
GDP −1.721 −1.596 I (0) −5.054a −5.309a I (1) −1.181 −1.780 I (0) −3.714a −4.889a I (1)
ENI −1.935 −1.256 I (0) −4.743a −3.994a I (1) −1.750 −1.848 I (0) −4.937a −5.195a I (1)
LAB −1.078 −1.810 I (0) −4.820a −4.239a I (1) −1.480 −1.401 I (0) −5.016a −4.790a I (1)
POP −1.293 −1.661 I (0) −5.316a −4.381a I (1) −1.315 −1.452 I (0) −4.012a −4.657a I (1)
GCF −1.881 −1.598 I (0) −4.985a −5.101a I (1) −1.217 −1.188 I (0) −4.990a −4.762a I (1)
TRD −1.675 −1.130 I (0) −4.643a −4.795a I (1) −1.710 −1.136 I (0) −4.488a −5.174a I (1)
URB −1.012 −1.648 I (0) −4.308a −5.064a I (1) −1.143 −1.470 I (0) −4.504a −4.794a I (1)

Note: a represent statistical significance at 1% level respectively

have a rate of adjustment of 3.61, 2.16, 2.47, and 2.79 years. Thus,
a quick deviation for the long-run equilibrium was shown by the
employed variables. Finally, the Haussmann test shows that
at a 1% level of significance, it is difficult to reject the
homogeneous restriction in long-term equilibrium, im-
plying that the PMG estimator is suitable and accurate
for estimating the pooling long-term coefficients.
Long- and short-run estimations for SSA
In the case of SSA economies in Table 13, the short-run esti-
mates state that each unit increase in ENI, LAB, GCF, and
EXP turns to increase GDP by 0.033%, 0.073%, 0.019%, and
0.703%, respectively. In the case of long-run estimates, the
PMG estimates revealed that a unit steps up in ENI, CO2,
Environ Sci Pollut Res

Table 8 Long-run relationship

test results Gτ Gα Pτ Pα

Value p- Value p- Value p- Value p-

robust robust robust robust

Deterministic chosen: constant

EACA −3.676c 0.070 −4.390b 0.011 −8.924b 0.010 −6.188b 0.070
MENA −5.029a 0.000 −3.806a 0.000 −5.897a 0.000 −3.537b 0.010
SAAP −4.581a
0.000 −3.403a 0.000 −4.929b 0.020 −4.858b 0.020
SESA −3.815b 0.020 −3.373a 0.000 −5.004b 0.030 −4.251a 0.000
SSA −4.257a 0.000 −3.761b 0.010 −6.383b 0.040 −3.055a 0.000
Europe −3.747b 0.010 −4.907a 0.001 −5.018b 0.020 −3.669b 0.050
Deterministic chosen: constant and trend
EACA −2.862a 0.000 −3.917b 0.024 −5.227a 0.000 −4.508b 0.020
MENA −5.344a
0.000 −4.521b 0.020 −5.438b 0.045 −4.811a 0.000
SAAP −4.619a
0.000 −3.848b 0.010 −7.456b 0.030 −4.203b 0.060
SESA −3.971a
0.001 −3.576a 0.000 −4.094b 0.010 −4.189a 0.000
SSA −4.2821 b
0.010 −4.941a 0.000 −4.004b 0.020 −3.846b 0.010
Europe −3.266b
0.020 −4.667c 0.070 −4.336a 0.000 −4.805a 0.000

Note: a, b, and c represent statistical significance at 1%, 5%, 10% level respectively

EXP, and URB which induces GDP by 0.071%, 0.403%, causal affiliation seen from LAB to GDP and GCF to GDP,
1.030%, and 0.277%, respectively. Considering the short- whereas in the long run, a bidirectional causal effect was ob-
run causation, a bidirectional causation affiliation was ob- served between ENI-GDP, EXP-GDP, and URB-GDP, with a
served between ENI-GDP and EXP-GDP, with a one-way unidirectional causal effect observed from CO2 to GDP. The

Table 9 Long- and short-run es-

timates for EACA Dep. variable GDP ENI LAB CO2 GCF TRD URB
(Eq. 9) (Eq. 10) (Eq. 11) (Eq. 12) (Eq. 13) (Eq. 14) (Eq. 15)

Long run
GDP - 0.725a −0.018 0.871a 0.276a 2.610b 0.642b
ENI 0.263a - 0.212a 0.065c 0.208c 1.022a 0.066b
LAB 0.140b 0.061 - 0.311 0.207c 0.302a 0.415
CO2 0.309 0.412c −0.184c - −0.426 0.067 −0.126a
GCF 0.321 0.285c −0.128 0.320 - 0.084b −0.231
TRD 0.078c 0.017a 0.065a 0.104c −0.036b - 0.773c
URB 0.398c 0.231 0.413c 0.214 0.157 0.036 -
Ect −0.278a −0.360a −0.321a −0.226a −0.237a −0.301a −0.417a
Short run
GDP - 0.503a 0.110b 0.148a −1.539 0.308c 0.315c
ENI 0.140 - 0.078a 0.171c 0.576a 0.710a −0.676
LAB −0.103b 0.237 - −0.973 0.285b −1.327a −0.390
CO2 0.081 −0.105b −0.323a - −0.321 2.017c 0.924b
GCF −0.212a 0.117 −0.742 0.077b - −0.164b 0.188a
TRD 0.037 0.276a −0.823b −0.401c 0.203c - 0.231
URB 0.211 1.342 0.302c 0.139c −0.153a 0.453a -
Haus. test value 3.06 2.71 5.12 3.17 0.98 5.39 2.37
p-value 0.13 0.36 0.51 0.12 0.47 0.42 0.27

Note: a, b, and c represent statistical significance at 1%, 5%, 10% level respectively. ECT shows the error
correction terms
 Environ Sci Pollut Res

Table 10 Long- and short-run

estimates for MENA Dep. variable GDP ENI LAB CO2 GCF TRD URB
(Eq. 9) (Eq. 10) (Eq. 11) (Eq. 12) (Eq. 13) (Eq. 14) (Eq. 15)

Long run
GDP - 0.578a 0.215a 0.109a −0.116 1.697a 0.411a
ENI 0.890a - 0.489b 0.269a 0.356a 0.288c 0.102c
LAB −0.078 0.345 - −0.112 −0.940a 0.345a 0.153a
CO2 0.134a 0.152c 0.06 - 1.534 −0.761 −0.042
GCF −0.416a 0.281a 0.112 −0.044 - −0.056 0.024c
TRD 0.701 0.314a 0.484a 0.111a −0.095 - 0.317
URB 0.616b 0.029 0.104a 0.205 0.194a 0.307 0.289b
Ect −0.286a −0.861a −0.206a −0.788a −0.329a −0.262a −0.319a
Short run
GDP - 0.257a 1.158b −0.048 0.027c 2.948a 0.030
ENI 0.116b - 0.135c 0.082a 0.115c 0.744a 0.619
LAB 0.045 0.261c - 0.064c 0.014 −0.033b 0.701c
CO2 0.136c −0.226b 1.850c - −0.283c 4.968 0.413a
GCF −0.084 0.127c 1.416a 0.066 - 0.429b 0.813
TRD 0.169 0.368 −0.280 −0.139c 0.018a - 0.571a
URB 0.152a 0.412a 0.677 −0.401 3.272a 0.511 0.023b
Haus. test value 3.81 5.07 3.52 2.17 3.69 4.81 2.63
p-value 0.27 0.33 0.42 0.48 0.17 0.52 0.37

Note: a, b, and c represent statistical significance at 1%, 5%, 10% level respectively. ECT shows the error
correction terms

Table 11 Long- and short-run

estimations results for SAAP Dep. variable GDP ENI LAB CO2 GCF TRD URB
(Eq. 9) (Eq. 10) (Eq. 11) (Eq. 12) (Eq. 13) (Eq. 14) (Eq. 15)

Long run
GDP - 0.524a 0.428a 0.039b 0.301 0.689a 0.503a
ENI 0.264a - −0.283 0.109c 0.140c 0.712b −1.711
LAB −0.217 1.598 - −0.041 −0.247b 0.596a −0.325
CO2 −0.473c −0.149a −0.104c - 0.179 −5.525 0.127a
GCF −0.528a 0.027b −0.122 0.082a - −0.916c 1.016
TRD 0.518a 0.131a 0.113a 0.121a 0.145c - −1.983c
URB 0.560 −0.710 0.086a 0.276 −2.428 −1.813a
Ect −0.319a −0.447a −0.205a −0.242a −0.471a −0.232a −0.310a
Short run
GDP - 0.266a 0.914 0.219b 0.315a 0.142b 0.114
ENI 0.071c - −2.478c 0.089c 0.079c 0.989b 0.271
LAB 0.268 0.473c - 0.042 0.125 −1.034 0.307c
CO2 −0.629 0.417c −0.680c - 1.194b −0.499b 0.216a
GCF −0.121 0.218a 0.041 0.107 - 0.657 0.133c
TRD 0.280 0.280b −0.123b −0.312c −0.059a - 0.046b
URB −0.607a 0.469 0.202a 0.314b 0.627 0.662a -
Haus. test value 3.49 4.44 5.40 3.13 4.76 2.79 2.54
p-value 0.21 0.48 0.46 0.88 0.37 0.32 0.26

Note: a, b, and c represent statistical significance at 1%, 5%, 10% level respectively. ECT shows the error
correction terms
Environ Sci Pollut Res

Table 12 Long- and short-run

estimations results for SESA Dep. variable GDP ENI LAB CO2 GCF TRD URB
(Eq. 9) (Eq. 10) (Eq. 11) (Eq. 12) (Eq. 13) (Eq. 14) (Eq. 15)

Long run
GDP - 0.351a −0.101c 0.413c −0.037 1.312a 0.417a
ENI 0.185 - 1.294a 0.165c 1.208c 1.122a −2.721
LAB 0.041 0.261 - 0.361 0.607 0.102 −0.737
CO2 0.115b 0.404c −0.484 - −0.487a 0.007c 0.911a
GCF −0.136b 0.281c −0.088 0.013 - 0.084c 1.316
TRD 1.078a 0.029a 0.079a 0.114 −0.016a - −0.079a
URB 0.221 0.832a 0.137 2.326a 5.745c 0.726 -
Ect −0.277a −0.464a −0.201a −0.297a −0.335a −0.405a −0.359a
Short run
GDP - 0.063c 0.573 −0.205 0.019b 3.703c 0.086
ENI 0.280b - 0.478 0.028c 0.386c 0.649a 0.430c
LAB −0.057 0.167b - −0.377b 0.518 −0.252 0.217
CO2 0.048 −0.075 −0.057b - −0.534 0.041 0.782a
GCF −0.322b 0.215a −1.447a 0.065 - 0.319 0.817c
TRD 0.180a 0.272a 0.218b −0.148a 0.169 - 0.556
URB 0.708c 0.343 −0.319 0.512 0.408a 2.039a -
Haus. test value 2.01 3.74 3.51 4.17 5.10 2.85 2.62
p-value 0.26 0.61 0.34 0.48 0.17 0.39 0.16

Note: a, b, and c represent statistical significance at 1%, 5%, 10% level respectively. ECT shows the error
correction terms

Table 13 Long- and short-run

estimations results for SSA Dep. variable GDP ENI LAB CO2 GCF TRD URB
(Eq. 9) (Eq. 10) (Eq. 11) (Eq. 12) (Eq. 13) (Eq. 14) (Eq. 15)

Long run
GDP - 0.071b 0.113 0.403c 0.076 1.030a 0.277a
ENI 0.106a - 1.14a 0.065c 1.301c 1.120a 0.016
LAB 0.020 0.261 - 0.361 0.607 0.102 0.756c
CO2 0.219 0.404c −0.484 - −0.487b 0.007a 1.414
GCF −0.293b 0.281c −0.088 0.013 - 0.084c −1.498b
TRD 1.378a 0.029a 0.079a 0.114c −0.016 - −0.454c
URB 0.552c 1.342 0.519a 0.124b 1.380b 0.129 -
Ect −0.314a −0.264a −0.399a −0.212a −0.239a −0.495a −0.306a
Short run
GDP - 0.033c 0.073c 0.164 0.019c 0.703c 0.062
ENI 0.280b - 0.478 0.028a 0.386c 0.649a 0.011a
LAB −0.057 0.167b - −0.377 0.518 −0.252 1.064a
CO2 0.048 −0.075 −0.057 - −0.534a 0.041b 1.209
GCF −0.322 0.215a −1.447 0.065 - 0.319 −1.418b
TRD 0.180a 0.272a −0.218 −0.148 0.169c - −0.660
URB 0.167b 0.242 0.781a 0.701b 1.808 1.072c -
Haus. test value 1.48 0.97 1.45 2.01 0.76 2.08 5.31
p-value 0.56 0.43 0.29 0.78 0.24 0.61 0.79

Note: a, b, and c represent statistical significance at 1%, 5%, 10% level respectively. ECT shows the error
correction terms
 Environ Sci Pollut Res

Table 14 Long- and short-run

estimations results for Europe Dep. variable GDP ENI LAB CO2 GCF TRD URB
(Eq. 9) (Eq. 10) (Eq. 11) (Eq. 12) (Eq. 13) (Eq. 14) (Eq. 15)

Long run
GDP - 0.611b 0.136a 0.537c 0.063a 2.530a 0.769a
ENI 0.418a - 1.294a 0.165c 1.208c 1.122a 0.385
LAB 0.075a 0.261 - 0.361c 0.607c 0.102c 0.261a
CO2 0.114 0.404c 0.484a - −0.487a 0.007 0.114c
GCF −0.230 0.281c −0.088 0.013a - 0.084c 0.154c
TRD 1.381a 0.029a 0.079a 0.114 −0.016 - 0.329
URB 1.669b 0.772 0.027 −3.402a 0.788a 0.456 -
Ect −0.508a −0.340a −0.154b −0.274a −0.203a −0.381a −0.295a
Short run
GDP - 0.423c 1.573b 0.211c 0.019 1.703c 0.601
ENI 0.280b - 0.478 0.028b 0.386c 0.649a 0.315b
LAB −0.057c 0.167b - −0.377 0.518 −0.252a 0.502
CO2 0.048 −0.075 −0.057c - −0.534c 0.041b 0.409a
GCF −0.322 0.215a −1.447 0.065 - 0.319 0.407a
TRD 0.180a 0.272a −0.218b −0.148 0.169 - 0.704
URB 0.897 1.646c 0.739 3.427b 0.105a 1.872b -
Haus. test value 1.48 0.97 1.45 2.01 0.76 2.08 2.51
p-value 0.56 0.43 0.29 0.78 0.24 0.61 −0.30

Note: a, b, and c represent statistical significance at 1%, 5%, 10% level respectively. ECT shows the error
correction terms

estimation from PMG results points that the variables GDP,
ENI, CO2, EXP, and URB are significant; thus, their rate of
adjustment correspondingly is given by 3.18, 3.79, 4.72, 2.02,
and 3.27 years, respectively; thus, the long-run equilibrium
indicates a quick deviation response by the variables.
Finally, the Haussmann test shows that at a 1% level of sig-
nificance, it is difficult to reject the homogeneous restriction in
long-term equilibrium, implying that the PMG estimator is
suitable and accurate for estimating the pooling long-term
coefficients.
Long- and short-run estimations for Europe
Lastly, in the case of Europe countries in Table 14, the long-
run estimates indicate that a unit increase in ENI, LAB, CO2,
GCF, EXP, and URB turns to increase GDP by 0.611%,
0.136%, 0.537%, 0.063%, 2.530%, and 0.769%, respectively,
whereas in the case of the short-run estimates, a unit increase
in ENI, LAB, CO2, and EXP correspondently increases GDP
by 0.423%, 1.573%, 0.211%, and 1.703%, respectively. In the
case of causality affiliation for the long run, a bidirectional
causation impact between ENI-GDP, LAB-GDP, EXP-GDP,
and URB-GDP was observed. Considering the short run, a
bidirectional causal affiliation was observed between ENI-
GDP, LAB-GDP, and EXP-GDP, with a unidirectional cau-
sality effect from CO2 to GDP. The PMG estimator unveiled
that, for Europe, the employed variables, GDP, ENI, CO2,
EXP, and URB, are statistically significant, with a corre-
sponding adjustment rate of 1.97, 2.94, 3.65, 2.62, and 3.39
years, respectively. Finally, the Haussmann test shows that at
a 1% level of significance, it is difficult to reject the homoge-
neous restriction in long-term equilibrium, implying that the
PMG estimator is suitable and accurate for estimating the
pooling long-term coefficients.

Table 15 Diagnostics test results

Statistics test EACA MENA SAAP SESA SSA Europe

Value Prob. Value Prob. Value Prob. Value Prob. Value Prob. Value Prob.

WSC T 27.350 0.301 4.387 4.902 5.47 3.03 5.07 5.139 4.78 5.01 5.012 5.267
WH T 14.841 0.147 21.714 0.216 32.374 0.171 36.691 0.381 14.429 0.375 15.703 0.161

Note: WSC T Wooldridge serial correlation test, WH T White heteroscedasticity test

Environ Sci Pollut Res

Table 16 Roots of characteristic polynomial test results

EACA MENA SAAP SESA SSA Europe

Root Modulus Root Modulus Root Modulus Root Modulus Root Modulus Root Modulus

0.9990 0.9991 0.9998 0.9999 0.9539 0.9539 0.9891 0.9891 0.9943 0.9943 0.9932 0.9928
0.9731 0.9711 0.9383 0.9999 0.9266 0.9266 0.9912 0.9925 0.9973 0.9973 0.9526 0.9525
0.8254 0.8247 0.8469 0.7914 0.5357 0.5357 0.9869 0.9869 0.9731 0.9793 0.8341 0.8818
0.7741 0.7737 0.7633 0.4949 0.4192 0.4192 0.7879 0.8684 0.7764 0.7786 0.8342 0.8818
0.2749 0.2723 0.6486 0.4949 0.2531 0.2753 0.7879 0.8684 0.3331 0.3332 0.7370 0.7367
−0.0203 0.0809 0.6486 0.1709 0.2531 0.2753 0.7538 0.7538 0.2247 0.2267 0.054 0.1604
−0.0313 0.0135 0.4608 0.1701 0.0333 0.0333 0.0444 0.2414 −0.110 0.1104 0.054 0.1604
0.0241 0.0231 0.3298 0.1664 0.4192 0.4192 0.0411 0.2414 0.036 0.0356 −0.083 0.0848

Note: No root lies outside the unit circle; thus, the VAR satisfies the stability condition

Diagnostic checks in BRICs countries. To obviate spurious results during esti-

After employing the PMG estimator to determine the short-
and long-run effects of the independent variables on economic
growth, the model’s validity was carefully tested. The
Wooldridge serial correlation and the White heteroscedasticity
tests were used to validate the model’s potency. The results
shown in Table 15 indicate no definite serial correlation and
heteroscedasticity among the model residuals. Again, we em-
ploy the roots of characteristic polynomial test and inverse
roots of AR characteristic polynomial for the panels EACA,
MENA, SAAP, SESA, SSA, and Europe to determine the
residuals from the subjected model. Figure 2 shows that the
VAR model for all the regions is well fitted and stable. The
results from roots of characteristic polynomial estimation are
reported in Table 16. Thus, we considered the estimated re-
siduals (Fig. 2) in VAR stable if all the obtained AR roots
(blue dots) are within the unit circle as highlighted with black
circle and the modulus are less than 1.
Discussion
The current study aimed to unveil the nexus amid economic
growth, energy consumption, trade, urbanization, and CO2
emissions in the presence of labor and gross capital formation
in 81 countries from the BRI countries. Thus, applying the
Pesaran-Yamagata test of homogeneity, the Breusch-Pagan
LM, bias-corrected scaled LM, Pesaran scaled LM, Pesaran
CD, and Friedman test unveiled the existence of heterogeneity
of errors in the slope and cross-sectional dependence. The
existence of heterogeneity of slope and cross-sectional depen-
dence entail any changes that occur in any variable employed
in a country that can affect other regional economies. These
outcomes are similar to the study done by Khattak et al.
(2020), when they analyzed the impacts of innovation, in-
come, and renewable energy consumption on CO2 emissions
mation, it was vital to ensure that the employed variables were
stationary; thus, the unit root tests (CADF and CIPS) applied
unveiled out that the series employed were stationary, I (1)
before estimation. This result is affirmed by the work done by
Wang et al. (2018) on the effect of energy consumption,
urbanization, and economic growth on CO2 emissions in
countries with different income levels. Likewise, Abban
et al. (2020) affirmed stationarity in exploring the relationship
amid energy intensity, economic growth, and CO2 emissions
along the BRI economies. Considering the long-run connec-
tion among the employed variables, the Westerlund-Edgerton
bootstrap co-integration applied unveiled the existence of a
long-run association. This outcome is substantiated by
Khoshnevis Yazdi and Dariani (2019) work in Asian coun-
tries. However, these results disagree with the work done by
Acaravci and Ozturk (2010), where they identified that the 15
countries in transition do not have a long-term relationship
between electricity consumption and economic growth.
Empirically, taking into account the effects of the long-
term forecasts, it can be inferred that the rate of energy con-
sumption, urbanization, trade, and CO2 emissions generally
affect economic growth, in respective of regional groupings
BRI countries. However, based on the heterogeneity among
the regional grouping, the effect of the variables employed
differs by weight and level of significance.
Across all the regional groupings, it was attested that ener-
gy consumption has a positive significant effect on economic
growth with the lowest effect of energy consumption showed
by the SSA region, while the highest consumption of energy is
the EACA region. The positive significant effect of energy
consumption observed on economic growth designates that
all regional grouping along the BRI relies on energy (fossil,
coal, oil) consumption massively for economic development.
Therefore, there is a possibility of CO2 emissions along these
regions since the study employed energy intensity as a proxy
for energy consumption. This positive impact of energy

Fig. 2 Illustration of the inverse roots of AR characteristic polynomial for all regions
consumption on economic growth does not deviate from the
work done by Gozgor et al. (2018), who also affirmed that a
positive effect of energy consumption on economic growth in
29 OECD countries. Likewise, the study by Chen et al.
(2019a) also confirmed the positive impact of energy con-
sumption on economic growth during the investigation on
the connectivity of the BRI and its economic growth.
CO2 emanations were found to be a beneficial impact on
GDP regardless of regional grouping with EACA having
the highest weight and SSA with the lowest weight. Thus,
it was inferred that a tangible connection exists between
GDP and CO2 along the BRI route. This rise in GDP caused
by CO2 along the regional grouping was expected during
the conceptualization of the study since the patterns of en-
ergy consumption have shifted to higher emission-intensive
goods from lower emission-intensive products because of
the rise in economic growth since the implementation of the
BRI in 2013 (Hussain et al. 2020). That implies that as
economic growth along the BRI grows, so does the lifestyle
Environ Sci Pollut Res
of both urban and rural inhabitants, as a conversion of fuel
from traditional wood-burning to fossil fuel consumption
rises fuel to increasing household appliances. The change
in lifestyle has an effect on energy consumption, and the
demand for energy-intensive good, resulting in an increase
in CO2 emissions, is the possible reason for the positive
impact of CO2 on GDP. The outcome obtained is in line
with the study done by Acheampong (2018) in 116 coun-
tries, where they affirmed a positive impact of CO2 emis-
sions in Caribbean-Latin America, the Middle East and
North Africa, Sub-Saharan Africa, and Asia-Pacific
regions.
Urbanization in all panel groups had a substantial pos-
itive effect on GDP in all regional classes with SSA hav-
ing the lowest weight of contribution on GDP, while
Europe has the highest weight of contribution. This pos-
itive effect of urbanization on GDP substantiates the fact
that developing countries (most countries along the BRI
are classified as developing) have embarked on numerous
Environ Sci Pollut Res
programs of accelerated urbanization to increase econom-
ic growth. Thus as stated by Bekhet and Othman (2017)
with the aim of enhancing economic growth, countries
have been transforming their cities’ self-organization
theory and through a new field of complexity science.
Underneath the obvious chaos and diversity of urban
spatial form, cities are now having a clear sense of order
and pattern, and they are no longer viewed as disordered
structures. This positive effect of URB on GDP is
consistent with the study done by Zhou et al. (2020) in
China. In their empirical finding, they stated that the ur-
ban population has a positive impact on economic growth.
The influence of trade on economic growth was as well
significant in all regional groups in the long run, with EACA
having the highest impact weight and SAAP having the
lowest impact weight. Thus, from the theoretical point of
view of the relationship between economic growth and
trade, this study supports the majority of studies with the
view that trade has a positive impact on economic growth.
The study by Feng et al. (2020) does not deviate from the
results obtained in this study, where they observed a positive
effect of trade on economic growth during their study on the
exportation of the influencing factors of trade competitive
advantage network along the BRI. Likewise, this result is
affirmed by the work done by Raghutla (2020), who inquired
the effect of trade on economic growth in emerging market
economies. Their empirical findings revealed that that trading
within the region and international trade increases the level of
economic growth. Likewise, the study done by Okoro et al.
(2020) in the ECOWAS community stated that regional trade
is much important since it has a significant positive effect on
economic growth.
With regards to the causal affiliation unveiled by the PMG
estimator among the employed variables as determinants
(ENR, URB, TRD, CO2) and economic growth, it was vital
to state that in establishing effective policy implications, the
causation affiliation among the employed variables is of great
importance. Across the regions, EACA, MENA, SAAP, SSA,
and Europe, a bidirectional causation effect was observed be-
tween GDP and ENI, while a unidirectional relation from ENI
to GDP was seen in the SESA region. Thus, it was inferred
that ENI and GDP are related in such a way that an increase or
decrease in one variable turns to correspondently increase or
decrease the other. Through the BRI, China has built about
240 coal-fired power plants equivalent to 251 GW of installed
capacity in 25 BRI countries with the aim to increase econom-
ic growth (Dombrowski 2017), which could be one of the
reasons for this relation. The two-way causal effect result seen
in EACA, MENA, SAAP, SSA, and Europe is consistent with
the work done by Yusuf et al. (2020) in oil-producing African
countries, where it unveiled a bidirectional causation effect
between ENI-GDP, whereas the one-way causal affiliation is
seen in SESA which is in line with the study done by Usman
et al. (2021) in South Asia economies. Their empirical find-
ings substantiated the fact that a one-way causal affiliation
exists from energy consumption to economic growth.
Considering the causal relationship between GDP and
CO2, across the regional groupings (MENA, SAAP, and
SESA), GDP and CO2 had a reverse causality affiliation, with
the exception of EACA, SESA, SSA, and Europe, where there
is a unidirectional causal effect from CO2 to GDP. The exten-
sion of economic activities, increasing roads and dams con-
structions, etc. along the BRI economies could be the possible
explanation for this reverse causation affiliation. Thus, any
attempt to abridge the emanations of CO2 will as well reduce
economic growth. Therefore, CO2-GDP is related in a way
that reducing or increasing in one turns to affect the other
correspondently. Thus, the consumption of energy such as
fossil fuel, oil, and coal must be curtailed, while increment
consumption of renewable energy is proposed. This
bidirectional causal effect does not pervert from the study
done by Aslan et al. (2021) in the Mediterranean countries,
where they stated that a bidirectional causation effect exists
between CO2 and GDP. However, the one-way causal affilia-
tion observed in EACA, SESA, SSA, and Europe is in line
with the study done by Cai et al. (2018) in G7 economies,
where that submitted that a unidirectional causality affiliation
exists from CO2 to GDP.
Inferring from the causal affiliation between TRD and
GDP, with the exception of MENA economies, all regional
groupings signaled a bidirectional causal effect between TRD
and GDP. Thus, this two-way causation liaison between CO2
and TR proposes that within the economies in these panels
(EACA, SAAP, SESA, SSA, and Europe), trade and CO2
emissions are extremely inter-dependent. High levels of trade
are linked to a higher level of economic development and vice
versa. This observation does not deviate from the work done
by Safi et al. (2021) in seven emerging countries, which stated
that trade has a bidirectional causal affiliation exist between
TRD-GDP. In the case of the one-way cause causal affiliation
seen in MENA economies, it can be inferred that an increase
or decrease in TRD turns to an increase or decrease
correspondently in GDP and not vice versa. This
unidirectional causal affiliation seen in MENA economies is
in line with the work done by Çevik et al. (2019) in Turkey,
where they stated the existence of a unidirectional causal af-
filiation from TRD to GDP.
Lastly, considering the causal relationship between URB-
GDP, the existence of one-way causal from URB to GDP in
SAAP and SESA regions, while a bidirectional causal affilia-
tion exists between GDP-URB in (EACA, MENA, SSA, and
EUROPE. The bidirectional causal effect between URB and
GDP depicts that these variables are related such that a unit
change in one variable turns to have a correspondence change
in the other variable. Thus, this observation does not deviate
from the work done by Wang et al. (2019), who also observed

a bidirectional causality affiliation between URB and GDP in
186 countries. However, the one-way causal affiliation seen in
SAAP and SESA regions is in line with the work done
Shaheen et al. (2020) in Pakistan, where a one-way causal
affiliation from URB was felt on GDP.
Conclusion
The key policy goal of each country is economic growth.
Thus, the BRI is a monumental push by the government of
China to accelerate economic growth among the countries
involved. Thus, the current study used a panel framework to
examine the relationship between economic growth and its
determinants based on regional groupings along the BRI over
the period 1990 to 2018. In order to incur more reliable and
valid results, the study employed robust panel methodology
such as slope heterogeneity, cross-sectional dependency test,
the CIPS and CADF panel unit root test, the Westerlund-
Edgerton bootstrap co-integration test, and the pooled mean
group estimator. As a result, different conclusions were delin-
eated accordingly.
Evidence from the empirical results revealed that both
the long- and short-run effect from the PMG estimator
showed that the employed explanatory variables (ENI,
CO2, TRD, and URB) are deemed as key factors marked
to increase economic growth among the BRI corridor, with
different weight contributions along the regional panels.
The causation affiliation among the employed variables
also revealed various causal liaison among the regional
classification. Thus, taking into account the heterogeneity
among the regional panels, the empirical results observed
in this study are robust and relevant to transnational depen-
dencies. Therefore, based on the inferences made during
the study, some policy implications deduced are as
follows:
1. Based on the empirical results of the study, it is pro-
posed that governments in countries with the highest
levels of environmental degradation (EACA, Europe,
and SESA) should invest more in the department of
energy innovation in order to develop devices that
minimize energy intensity and to help reduce CO2
levels. Again, the government in the stated regions
could educate its citizens about the negative effects
of environmental pollution not just in their personal
lives, but also on animals, and non-living things, so
that the usage of renewable energy will be optimized.
CO2 emissions have a positive impact on economic
development, implying that industrial production and
manufacturing activities contribute to growth. As a
result, manufacturing outputs can continue to in-
crease. Increased CO2 emissions, on the other hand,
Environ Sci Pollut Res
are not ideal for better environmental efficiency. As a
result, smart national policies should be introduced to
recognize sustainable energy sources (such as renew-
able energy) in order to mitigate CO2 emissions from
energy usage. Clean, cost-effective, safe, dependable,
and long-term energy should be prioritized. To ensure
the efficient supply of increasing energy needs, more
supervisory and administrative changes must be made.
2. The government across each region could include tax
and other incentives to enable multinational companies
and businessmen of the country to build equipment that
are environmentally friendly and help minimize carbon
dioxide intensity. Again, the government could reduce
imports (cars, machinery, etc.) levels in order to reduce
fuel usage to a certain degree and to explore alternative
modes of transportation that use renewable energy
sources and do not harm the environment.
3. Since East, Central, Southeast, and South Asia have a
very high population density, these regions’ most valu-
able resources are their large labor forces (labors), which
contribute to economic development. Economic growth is
also influenced by population density. As a result, gov-
ernment and non-governmental organizations must en-
sure that skill-based training and quality education are
provided in order to generate more skilled labor, which
is necessary for development.
4. Lastly as trade steps up economic growth, it can be attrib-
uted to the reality that these countries’ production capac-
ities are competitive on a global scale. These countries’
governments should continue to take appropriate mea-
sures in this regard. Imports of intermediate and produc-
tive capital goods should take precedence over imports of
consumer goods. This will boost both domestic and ex-
port demand. To achieve the desired goals in the short and
long runs, proper development-oriented trade policies, as
well as other macroeconomic policies, must be formulated
and implemented.
5. Since there is a linear link between urbanization and
economic growth, urbanization has the potency to in-
duce economic growth; however, this potency will be
limited unless favorable institutions are established
and appropriate investments in public infrastructure
are made. Thus, economic growth could be facilitated
by removing barriers to rural-to-urban migration, but
the advantages will be substantially larger if support-
ive policies, market creation, and infrastructural ex-
penditures are made. Thus, governments along the
BRI must take appropriate steps to enable the benefits
of improved urban aggregation and reduced dispar-
ities in income. In doing this, a careful intervention
in the urbanization process is required. Cities must
employ real-life projections as a basis for public in-
frastructure investment.
Environ Sci Pollut Res
Nomenclature GDP, economic growth; TRD, trade; ENI, energy inten-
sity; CO2, carbon dioxide emissions; URB, urbanization; VAR, vector
autoregressive; OLS, ordinary least squares; SUR, seemingly unrelated
regression; VECM, vector error correction model; STIRPAT, stochastic
impacts by regression on population, affluence, and technology; ARDL,
autoregressive distributed lag; OECD, Organization for Economic Co-
operation and Development; FMOLS, fully modified ordinary least
squares; DOLS, dynamic ordinary least squares; PMG, pooled mean
group; BRICS, Brazil, Russia, India and China; EACA, East Asia and
Central Asia; MENA, Middle East and North Africa; SAAP, South
America and Pacific; SESA, Southeast and South Asia; SSA, Sub-
Saharan Africa
Acknowledgements The authors are very grateful for the critical com-
ments made by Editor (Prof. Nicholas Apergis) handling the manuscript
and the anonymous referee, which have significantly improved the pa-
per’s depth.
Author contribution Y.H supervised the research from the beginning to
the end. O.J.A conceived the study. O.J.A and A.D.B collected the data,
O.J.A, A.D.B, and E.T.A.A estimated the econometric model, and O.J.A
drafted the manuscript. The authors read and approved the final
manuscript.
Funding This work was supported by the National Natural Science
Foundation of China with Grant No. 71701082.
Data availability All data used in this study are publicly available online.
The information on the sources of data is provided in Table 2.
Declarations
Ethics approval and consent to participate Not applicable
Consent for publication Not applicable
Competing interests The authors declare no competing interests.
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