Modelling the Relationship between Air Pollution and Economic Growth in Somalia

Abstract

Throughout human history, there has been a clear connection between pollution and the economy. However, the relationship between environmental harm and economic progress is complex, and disagreements between various academic disciplines have made it difficult to understand this phenomenon fully. A unit root test was conducted to gain more insight, which proposed the possibility of further empirical analysis. The Johansen cointegration method was also used to show a long-term connection between air pollution and economic growth. At the same time, the vector autoregressive model (VAR) indicated a short-term connection between the two. A Vector Error Correction Model (VECM) was then employed to estimate the relationship, and the findings confirmed the existence of the Environmental Kuznets Curve (EKC). The EKC demonstrates that economic growth has positive and negative effects on air pollution. The Granger causality test conducted in Somalia showed a causal link between economic growth and air pollution. The EKC model further supported this finding by demonstrating that economic growth has a statistically significant positive impact on greenhouse gas (GHG) emissions. This implies that Somalia has seen increased GHG emissions, leading to environmental degradation. Therefore, the Somali government must prioritise the implementation of a sustainable energy policy to improve air quality and prevent further environmental deterioration.