Decoupling Growth and Pollution: The Interplay of Globalization, Energy, Economy, Finance, and Environmental Quality in SCO Countries

The study aims to examine how globalization, energy consumption, economic growth, and financial development affect environmental quality in SCO member countries. The data collected spans from 1990 to 2019. We conducted a stationarity test and analyzed the long-term relationships using fully modified OLS. Our results show that an increase in energy consumption, economic growth, and financial development leads to higher CO2 emissions, thus reducing environmental quality. On the other hand, globalization was found to reduce CO2 emissions for the country. Additionally, D.H. panel causality test revealed bi-directional causality between environmental quality and the variables used in our analysis. Evidently these findings are crucial for formulating effective policy recommendations aimed at improving environmental quality.