Recent research conducted by Sidahmed Bekhti from the University Mostaganem AbdelHamid Ibn Badis in Algeria has shed light on the complex relationship between economic growth and carbon dioxide (CO2) emissions in the country. Published in ‘Theoretical and Applied Economics’, this study employs the Autoregressive Distributed Lag (ARDL) bounds testing methodology to explore the Environmental Kuznets Curve (EKC) hypothesis, which suggests that as an economy grows, environmental degradation initially increases before eventually declining.
The study analyzes annual data from 1962 to 2014, focusing on CO2 emissions and GDP per capita. Bekhti’s findings confirm the presence of an EKC pattern in Algeria, indicating a reverse U-shaped relationship. This means that after reaching a certain level of economic growth, specifically a GDP per capita of approximately $4,125.58 (in constant 2010 dollars), the country begins to see a decrease in CO2 emissions. Algeria achieved this threshold in 2005, suggesting that the economy has entered a phase where further growth can align with environmental improvements.
One of the key insights from the research is the importance of accounting for structural breaks—significant changes in the economic-environmental relationship over time. Bekhti noted, “The inclusion of structural breaks in the analysis led to the stability of the model compared to the case of their absence.” This stability provides a more accurate understanding of how economic activities impact the environment, which is crucial for effective policy formulation.
For the energy sector, these findings present both challenges and opportunities. As Algeria continues to grow economically, there is an urgent need for investment in clean energy technologies and sustainable practices to ensure that emissions do not escalate alongside economic expansion. The research highlights that while Algeria is on the right path, sustained efforts in promoting renewable energy sources and enhancing energy efficiency will be vital.
Moreover, the study suggests that policymakers should consider additional factors that influence CO2 emissions, such as the adoption of biofuels, advanced technologies, and increased environmental awareness. By focusing on these areas, Algeria can not only maintain its economic growth but also lead the way in environmental stewardship in the region.
In summary, Bekhti’s research contributes valuable insights to the ongoing discourse on economic growth and environmental sustainability in Algeria. It underscores the necessity for strategic planning in the energy sector to capitalize on economic advancements while prioritizing environmental health. As highlighted in the study, “Policymakers should promote clean energy and sustainable economic practices to ensure continued environmental improvements alongside economic growth.” This balanced approach could pave the way for a greener future in Algeria, benefiting both the economy and the environment.