Environmental Performance and Economic Growth in Middle East and North Africa Countries

BACKGROUND. Studies on environmental performance/quality and economic growth show inconclusive results. OBJECTIVE. The aim of the present study is to assess the non-linear relationship between environmental performance and economic growth in the Middle East and North Africa (MENA) region from 2002–2018. METHODS. A sample of fourteen (14) MENA countries was used in the present analysis. However, due to important differences between countries in this region, the whole sample was divided into two sub-samples; nine Middle Eastern countries (MEAS) and five North African countries (NAF). We performed the panel smooth transition regression model as an econometric approach. DISCUSSION. Empirical results indicate a threshold effect in the environmental performance and economic growth relationship. The threshold value differs from one group of countries to another. More specifically, we found that the impact of environmental performance and economic growth is positive and significant only if a certain threshold level has been attained. Until then, the effect remains negative. CONCLUSIONS. The findings of the present study are of great importance for policymakers since they determine the optimal level of environmental performance required to act positively on the level of economic growth. MENA countries should seek to improve their environmental performance index in order to grow output. COMPETING INTERESTS. The authors declare no competing financial interests.