Analysing Association in Environmental Pollution, Tourism and Economic Growth: Empirical Evidence from the Commonwealth of Independent States

Abstract

Clean and green environment along with sustainable development is the prime objective of every state. We explore empirically the nexus between tourism, environmental pollution measured by carbon (CO2) emissions, population, trade, foreign direct investment (FDI) and economic growth in six countries from the Commonwealth of Independent States over 1995–2018. Traditional panel estimation technique is employed, where the Hausman test suggests fixed-effects over random effect estimator. We also employed the robust least squares (RLS) estimator to confirm the empirical estimates. Results show that a 1% increase in CO2 will attenuate the economic growth by 0.14% and that 1% raise in the tourism activities can boost growth by 0.04%. Both the fixed-effect and RLS estimates reveal that tourism, population growth and trade contribute significantly to economic growth, whereas CO2 adversely affect growth. The Granger causality test shows a two-way causality between economic growth and CO2 and between growth and trade. Empirical results also indicate a one-way causality between growth and FDI, population and FDI, population and CO2 along with population growth and tourism. These findings suggest that adopting effective policies that can expand trade, enhance FDI and promote the tourism sector with minimum environmental damage will ultimately accelerate sustainable economic development.