Sliding upward: The relationship between economic growth and environmental degradation in the Middle East

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Sliding Upward

The Relationship Between Economic Growth and

Environmental Degradation in the Middle East

Annefleur Teeuwen

Sliding Upward Annefleur Teeuwen – s1567632 Bachelor project IBO 2019 – Inequality in Political Perspective #6 Supervisor: Brenda van Coppenolle Final version June 17th_, 2019 Word count: 8,357

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Introduction

Contrary to popular belief, we do not face a choice between economy and ecology. It is often said that protecting the environment would constrain or even undermine economic growth. In fact, the opposite is true: unless we protect resources and the earth’s natural capital, we shall not be able to sustain economic growth (Kofi Annan, 2001).

This quote illustrates part of the complex relationship between environmental quality and economic development. The production of goods often leads to environmental degradation, and when a state becomes wealthier, more citizens can afford goods. This increases the pressure on the environment, as physical resources are often limited (Mingst & Arreguín‐Toft, 2014, p.405). According to antigrowth critics, the new wealth of growing economies is not used enough in favour of the environment (Brue, McConnel, & Flynn, 2013, p.257). This field of tension between the environment and the economy is in constant development, and this relationship is the topic of this paper.

The Environmental Kuznets Curve (EKC) is a theory that attempts to illustrate the relationship between economic growth and environmental degradation (Agarwal, 2019). In short, the theory states that as economies start developing, the environment initially suffers. Environmental degradation continues until a turning point, where economic developments no longer cause environmental degradation, but rather environmental improvement (Grossman & Krueger, 1995). This theory is based on a theory regarding the relationship between the development of an economy and economic inequality, developed by Simon Kuznets in the 1950s (see theoretical framework). Since the theory of the EKC was developed, it has been tested, applied, detailed and criticized by multiple authors. Various studies on the EKC have focussed on different variables that explain the relationship between economics and environment (Stern, 2004, p.1423). However, little research has been done on the difference between democracies and authoritarian regimes: most research has focused either on single states or on differences between forms of democracy (Bernauer & koubi, 2009; Poloni‐Staudinger, 2008; Alsamara, Mirabet, Salman Saleh & Anwar, 2018; Ben Jebli & Ben Youssef, 2015). In this thesis I broaden the discussion and discuss what the difference is between democratic and authoritarian regimes by looking at case studies of Middle Eastern states. With this, the following question will be researched: does regime type influence the relationship between environmental degradation and economic development?

The paper is divided into several chapters. The theoretical framework will explain the origins of the EKC and the shape of the curve, before discussing the influence regime types could have on the EKC. The methodology details some of the concepts used, and explains the comparative method used for this research. In this research, environmental degradation is measured in terms of CO2 emissions,

and this choice will be explained there as well. In the results chapter four different case studies will be examined, two with authoritarian regimes and two with democratic regimes, and it shall be argued whether or not the states behave as expected. The paper will end with a conclusion which will summarize the results, discuss some of the limitations of the research, and give

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Chapter 1: Theoretical Framework

In the 1950s, Simon Kuznets developed a theory concerning the relationship between economic inequality and the development of the economy. In the simplest terms, his theory states that inequality increases in the early stages of development, until a turning point of a certain gross domestic product (GDP) per capita is reached. The turning point would signal the decline of economic inequality. This development represents an inverted‐U relationship in graphs, as illustrated in figure 1. This theory was labeled the Kuznets Curve (Kuznets, 1955).

Figure 1. The Kuznets Curve. Retrieved from https://www.economicsonline.co.uk/Global_economics/Inequality.html In the 90s, a theory concerning the relationship between environmental degradation and economic growth was developed. It stated that the same inverted‐U relationship would show on graphs illustrating this development: at first environmental degradation would increase as the economy becomes more developed, until again a turning point is reached, where after the environmental degradation would decrease with economic development. As this theory so represented the original Kuznets Curve, it was called the Environmental Kuznets Curve (EKC) (Grossman & Krueger, 1995), as illustrated in figure 2.

In order to specify the relationship between economics and the environment further, applied econometricians have measured different sets of potential parameters. These parameters indicate between which points the expected GDP per capita would be when the turning point is reached (Stern, 2004, pp.1424‐1425, 1430). As this paper is exploratory in nature, I will be focusing on general trends and differences between authoritarian and democratic regimes. Measuring parameters specifies these trends further, and is therefore not in place in exploratory research.

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Figure 2. The Environmental Kuznets Curve. Retrieved from http://geogonomics.com/index.php/2018/07/18/the‐ kuznets‐curve‐how‐accurate‐is‐it/

The Inverted‐U Shape

There are multiple factors that explain the inverted‐U shape of both the original Kuznets Curve and the Environmental Kuznets Curve. In the article Kuznets originally published, he clarifies two main forces that explain the increase of economic inequality. The first of these forces is savings: (Kuznets, 1955, pp.7‐8). In researching the EKC savings are not particularly relevant except as a more accurate measurement of wealth per capita. (Neve & Hamaide, 2017, p.55‐56). The second force Kuznets mentions relates to the effects of industrialization and urbanization (Kuznets, 1955, pp.7‐8). These are also of importance for explaining the EKC: the path of industrialization and urbanization initially causes much environmental degradation, as we have seen in the Industrial Revolution (Kaya & Doyar, 2017, p.38). However, as states increase their economic wealth, the economy can switch from an industrial economy to a service economy, decreasing environmental degradation (Torras & Boyce, 1998, p.148). Often the more environmentally degrading industrial production moves to different states.

There are various other reasons for the inverted‐U relationship between environmental degradation and economic development. First, as time passes, more environmentally friendly technologies and methods can be developed for industrial processes. These technologies need time and money for research and development, and therefore they only develop when states’ economies have developed enough (Dasgupta, Laplante, Wang & Wheeler, 2002, pp.153‐155). Second, environmental issues are often not high on the agenda when a country is still developing. Only once a certain economic level is reached do states and societies turn toward environmental issues (Greig, Hulme & Turner, 2007, p.243). A third reason is that energy security can become a big issue for developed states. The governments of developed states often do not want to be dependent on other states for energy, and will therefore slowly switch energy production to renewable and sustainable resources. Less Developed Countries (LDCs) often have other security issues that are more urgent. A fourth reason is that some forms of environmental degradation lead to direct threats such as rising sea levels, more extreme weather, and dangerous toxicity levels of air and water. Again, LDCs often do not have the means to deal with these problems, or they have more immediate problems, while developed states often do have the means (Cohn, 2008, p.119).

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As the EKC has been researched, more scenarios and alternative curves have been developed to represent this relationship between environmental degradation and economic development. An article of Dasgupta, Laplante, Wang and Wheeler (2002) mentions a number of alternative scenarios and curves for the EKC, as shown in Figure 3. According to them, the original EKC is subject to new developments, creating a new relationship between economic development and environmental quality. Some of these factors include the development of technologies and preferences, and corruption (Dasgupta et al., 2002, pp. 149‐151). Of the three alternative scenarios, two are slightly more pessimistic than the conventional EKC, and one is somewhat more optimistic. They will each be discussed below. Figure 3. The Environmental Kuznets Curve: Different Scenarios. Retrieved from Dasgupta et al. (2002), p.148. The first new scenario is the Revised EKC, where the conventional EKC is revised downward, making the switch from environmental damage to environmental improvement earlier. One reason why the EKC can be revised downward is that the curve is very dependent on the reaction of many parties on the economic growth and consequent environmental degradation. Dasgupta et al. (2002) indicate that public opinion matters, and therefore the ideology of the government as well. Public concern regarding the environment is increasing, which puts countering environmental degradation higher on the political agenda, encouraging the creation of regulations. These regulations limit pollution damage, and increase the quality of technology (Dasgupta et al., 2002, pp.151‐153). Another reason for the curve of the Revised EKC is the effect that globalization has on technological development. With globalization, technological innovations for cleaner production are shared more easily across states, which can speed up the process for developing states (Dasgupta et al., 2002, pp.153‐155). Another reason why the EKC could be moving downward is through a change in the underlying economic structures, called composition effects (Heerink, Mulatu & Bulte, 2001, p.359). Perhaps the most important of these is economic liberalization, which can affect the EKC for two reasons. First, because of liberalization, LDCs receive most of the labour‐intensive production, which is in many cases less pollution‐intense, with exceptions such as fabric production using chemical dyes and production using toxic chemical cleaning solvents. Second, liberalization of the economy has also

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increased the opportunities for large‐scale production, making production more efficient and therefore less polluting (Dasgupta et al., 2002, pp.153‐155).

Not only liberalization affects environmental issues and economic inequality, but globalization does as well. Ha (2012) has written an article on the effects of globalization on economic inequality, fitting with the original Kuznets curve. He also argues that globalization in the form of fast‐growing trade flows and foreign direct investments correlate with rising income inequality in LDCs. This goes directly against standard trade theory which states that globalization should reduce inequality, as the demand and therefore the price of unskilled labour in developing countries would rise with globalization. Instead, more technology and skilled‐labour intensive production moves to LDCs than unskilled‐labour intensive production, increasing the demand and therefore the wages of skilled workers. This increases the difference between unskilled and skilled workers in LDCs, and therefore between rich and poor (Ha, 2012, pp.541‐544). This is much like the way that environmentally degrading activities are moved from Developed Countries (DCs) to LDCs.

Globalization and technological developments have another, rather more negative side to them regarding the EKC. This side is illustrated in the two rather more pessimistic scenarios that Dasgupta et al. (2002) described, called the Race to the Bottom and the New Toxic scenarios. The Race to the Bottom scenario leans heavily on the impact of globalization. It states that because of globalization, the EKC is no longer a realistic scenario because global competition creates new pressures on environmental regulations. DCs can maintain these regulations, but LDCs cannot: it would damage their global economic position too much. Therefore they will remove or avoid any legislation regarding the environment, creating so‐called ‘pollution havens’ for companies: places where companies can produce without extra costs for environmental legislation. These favourable conditions cause companies and production chains to relocate to pollution havens in LDCs (Dasgupta et al., 2002, pp.159‐160). This relocation of companies and production chains removes the environmentally degrading activities from DCs with legislation to LDCs without legislation, nullifying the effect of legislation globally, but increasing the effect of legislation for DCs. The reason the effectiveness of the legislation for DCs increases, is that with legislation, any polluting company or production chain will move to LDCs, removing the bulk of polluting production altogether. Not only that, but legislation and the consequent pollution havens can remove the incentive to develop less environmentally harmful technologies. LDCs could not afford developing them, and DCs would not need to.

The removal of legislation from some areas could also affect the category of toxics used. With poor or absent legislation, companies or producers are tempted to use cheaper and economically more efficient toxics. These are often more environmentally damaging, increasing environmental degradation even further. This is called the New Toxics scenario, the third alternative scenario that Dasgupta et al. (2002) developed. Not only legislation can influence the toxics used, however. Research and development can also have an effect, as new toxics may be developed, or it may be discovered that current ‘clean’ toxics are in fact environmentally degrading (Dasgupta et al., 2002, pp.162‐163).

Regime Type

After analysing some of the forces that influence the relationship between environmental degradation and economic development and therefore the line of the EKC, it is important to analyse

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the impact of regime type and government ideology. Environmental quality is a tragedy of the commons, giving it an interesting position vis a vis legislation in general, even if one disregards the effects of globalization. Clean air is non‐exclusive and the air is open‐access: anyone can pollute, and the effects are for everyone, they are not limited to certain groups of people. Therefore, it is economically attractive for producers to produce and pollute without adding costs to relieve the environment. At the same time there is a limit to how much CO2 or pollution the environment can

handle without it being damaging. Without external regulation, producers could be tempted to pollute without limitations (Hardin, 2014, p.711). External regulations need to be formed to limit CO2

emissions, and these regulations need to be adapted per situation (Ostrom, 2014, pp.724‐725).

Political orientation or regime type is an important aspect in legislation, as the government decides how far it goes, for example in what materials and techniques are permitted in production. In an article researching the importance of government ideology on the politics of redistribution, Ha (2012) makes a pooled time‐series regression analysis of LDCs and income inequality which supports the idea of a Kuznets curve. He argues that it is because of the political orientation and the ensuing legislation of the governments that the original Kuznets curve is disrupted (Ha, 2012, pp.549 – 552). Kuznets himself also recognizes the importance of regime type for economic development and inequality. For example, he wonders how LDCs can reach higher levels of economic performance without authoritarian regimes using the population as “cannon‐fodder in the fight for economic achievement” (Kuznets, 1955, p.25), and he emphasizes the danger of governments not capable of serving as basic agents in capital formation for economic growth (Kuznets, 1955, p.26). These are considerations that we must also keep in mind when looking at the EKC, as the environmental quality can also be used as “cannon‐fodder” for economic development. Authoritarian regimes do not have to care about environmental degradation, and democratic regimes are dependent on public opinion. Often the assumption is that democratic regimes are better at safeguarding the environment, partially because of public opinion which is more open and demanding for environmental quality (Payne, 1995, pp.43‐44). Keeping this in mind, it is interesting to note that citizens of the Middle East are notorious for their lack of care for environmental issues (Vogel, 1998, p.255). This could make the difference between authoritarian regimes and democratic regimes smaller, as public opinion and voter preference regarding environmental policy do not have to be strong factors for democratic regimes. Voters in a democratic regime in the Middle East will probably not let their vote be much influenced or influenced at all by environmental issues. One process that heavily influences public opinion on environmental issues in the Middle East is the security situation. The Middle East is a turbulent area, and physical security issues play a greater role for governments than environmental security. Especially CO2 emissions, the topic of this paper, do not directly pose a threat. Coming back to the effect of regime type on economic policy, Przeworski and Limongi (1993) wrote an article where they placed arguments for and against democracy or authoritarian regimes as the better regime type for economic growth against each other. According to the EKC, the states more economically developed create less environmental degradation (Grossman & Krueger, 1995, p.372), so if regime type matters for economic development, it matters for environmental degradation. The posed arguments in the article are interesting. First, property rights are important for economic growth. Regime type can influence this: authoritarian regimes might be the stronger regimes to uphold those property rights, as authoritarian governments usually have little effective opposition;

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while democratic regimes might be more credible to uphold them, as they are dependent on the people’s vote and satisfaction (Przeworski & Limongi, 1993, p.53). Second, democracies can undermine long‐term investment, as they allow pressures for immediate investment. One reason behind this is that democratic governments are often more short‐term focused. Authoritarian regimes, being more long‐term oriented, can force long‐term savings and investments. (Przeworski & Limongi, 1993, pp.51‐55). The third argument is that dictatorships are better for economic growth because they can insulate the state from particularistic pressures. In other words, state autonomy, which is said to favour growth, is only properly possible under authoritarian regimes. Single entities like states are much more efficient for economic growth than individuals, and authoritarian regimes are more likely to be able to provide such a single entity, resistant to inefficient societal pressures. A democracy can change with every election and depends on multiple parties and interests, which makes it less of a single entity. (Bernauer & Koubi, 2009, pp.1359‐1362). However, fourth, in practice autonomous rulers are much more predatory than democratic rulers are. Politicians cannot only attain the greater good via the regime, but they can also attain personal goods, and in practice, many politicians vie for the latter (Przeworski & Limongi, 1993, pp.55‐60).

This difference between the effectiveness of democratic and authoritarian regimes, and the accompanying factors, is not only relevant for economic development, but also for environmental policy. First, environmental policy also requires long‐term thinking, which authoritarian regimes are more prone to. Second, environmental policy can also be more effective with a stronger state, resistant to societal pressures. Democracies have to deal with many interest groups, each with a different degree of care for environmental issues, which could complicate and delay the creation of environmental policy. An authoritarian state can force environmental policy more. However, with both these aspects, we again could ask ourselves the question why an authoritarian regime would care about the environment.

We can extend this analysis of the difference between democratic and authoritarian regimes on the relationship between income inequality and economic growth, by looking again at Ha (2012). He argues that democratic regimes have to consider the median voter theorem. This theorem would suggest that in order to stay in power, which is assumed to ultimately be the desire of politicians, redistribution of resources has to take place. In LDCs, income inequality is generally skewed upwards, so under the presumption of equal participation in each income sector, redistribution under poor and middle incomes would be necessary. However, in practice, the richest quintile is often represented more in politics, as both politicians and voters, and therefore the regime can afford to focus mainly on the richer quintile. The poor often lack connections and funds to influence politicians, and the realm of political parties, candidates, and interest groups can be too overwhelming and time‐consuming to understand. This creates differences in the political power of rich and poor in a state, prompting a power struggle between classes (Korpi, 1998, pp.viii‐xi). This theory, that democracy does not automatically mean fair redistribution, is called the power resources theory, or the political class struggle. In view of this, Ha argues that the ideological orientation of a democracy also matters in their politics. For both authoritarian and democratic regimes, a leftist orientation seems to be necessary for redistribution politics (Ha, 2012, pp.544 – 545). This argument is of interest for this paper, as Ha seems to say that regime type matters less than ideological orientation, and that this ideological orientation in its turn could affect the relationship between environmental degradation and economic development, and therefore the shape of the EKC.

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Barro (1999) turns the argument around. He does not argue that regime type or ideology influences economics, but rather that economic development and wealth are important factors for democratization, and therefore the regime type of a state. With cross‐country empirical work, he shows how economic development and standard of living outweigh almost every other variable correlating to democratization. The theory he strengthened with this empirical work is the Lipset/Aristotle hypothesis, stating that a higher standard of living promotes democracy (Barro, 1999, p.182). This is interesting in the case of the Kuznets curve and the EKC, as it creates the hypothesis that a higher GDP per capita, which correlates with a lower rate of environmental degradation, in general fits with democratic regimes. The first half of the EKC, with increasing environmental degradation and a lower GDP, would be dominated by authoritarian regimes, while the second half of the EKC, with decreasing environmental degradation and a higher GDP, would be dominated by democracies.

Torras and Boyce (1998) and Heerink, Mulatu, and Bulte (2001) have extended the discussion connecting environmental issues to government ideologies and an increase of income. Torras and Boyce (1998) argue that distribution issues of both power and wealth should be taken into account. Greater equality of incomes and wealth are hypothesized to result in lower levels of environmental degradation. More equitable distribution leads to a greater portion of the population with a basic level of wealth. This basic level of wealth will leave citizens more open to other issues not related to their economic position, such as environmental issues. Environmental quality is a public good, and wealth across the state is needed to address the issue, as well as public support (Torras & Boyce, 1998, p.149‐151). Heerink, Mulatu, and Bulte explain this by saying that equitable distribution contributes to social harmony, which benefits long‐term issues such as environmental degradation, and again, a more equal distribution will presumably lead to more people being able to view environmental degradation as a desired good (Heerink, Mulatu & Bulte, 2001, p.360). However, when the scholars apply their hypotheses on empirical data, Torras and Boyce (1998) find that indeed inequality of wealth and power makes a difference, though it can vary in low‐income and high‐income countries (Torras & Boyce, 1998, p.155). Heerink, Mulatu, and Bulte (2001) find exactly the opposite: income inequality causes less environmental degradation than income equality at first: only at a later state in the development is this pattern reversed (Heerink, Mulatu & Bulte, 2001, p.366). This is relevant for this study, as it specifies the potential requirements for economic development leading to less environmental degradation.

Hypothesis

According the EKC, DCs should show a decrease in environmental degradation, while LDCs should show an increase. However, the previously discussed literature suggests that though authoritarian regimes can be more effective in decreasing environmental degradation, democratic regimes have extra incentives to do so. Therefore, the hypothesis of this paper leans on the idea that democratic regimes work more towards limiting environmental degradation than authoritarian regimes. Therefore, the hypothesis is as follows: “democratic regimes affect the relationship between economics and the environment more directly than authoritarian regimes, leading to democratic regimes having an EKC with a lower or an earlier turning point than authoritarian regimes.”

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Chapter 2: Methodology

As mentioned above, the main research question is: does regime type influence the relationship between environmental degradation and economic development? I shall attempt to answer this through four different case studies from the Middle East. Two of these case studies will be authoritarian, and two democratic, and they will be chosen based on GDP per capita in 2017. In this section I will focus first on the conceptualization of the terms ‘environmental degradation’, the ‘Middle East,’ ‘democratic regimes,’ and ‘authoritarian regimes’, and I will specify how ‘economic development’ will be measured. After that the methods used to select the case studies will be explained.

‘Environmental degradation’ is of course much too broad and too vague a term to work with in such a short paper. Therefore, I have chosen to take one specific area of environmental degradation: air quality, and specifically CO2 emissions. There are multiple reasons to look at air quality over other

kinds of environmental issues. First, a lot of research has been done on air pollution, and a lot of data is available. Second, air pollution is more comparable across states than for example water management. Especially in the Middle East water management is a lot more politically loaded, as each state is so dependent on it. It is less comparable between states as some states have fewer reserves than other states and thus have to be more careful. Air pollution is a lot more spread out across states, and a much more indirect threat than a lack of clean water. Not only that, but Bernauer & Koubi (2009) have given a few more reasons why air pollution is a good environmental issue to compare. First, it is produced by human activity; second, it can and is subject to regulations internationally because it has a harmful effect on humans and ecosystems; third, technologies do exist to counter air pollution.

Even the term ‘air pollution’ is still too broad, however, as there are many kinds of air pollution, and for practical reasons it is easier to focus on one type of air pollution such as CO2 emissions. In his

article about the EKC theory, Stern (2004) has found that there has been a shift in what kind of air pollution is more important and more prevalent. He claims that the weight has gone from SO2 and

NOx to CO2 and solid waste (Stern, 2004, p.1426). For this reason I will be focusing on CO2 emissions,

much like Heerink, Mulatu, and Bulte (2001, p.363). It is also a practical choice, as the data for this kind of pollution is most recent and available for every state that will be analysed in this paper. An important side‐note is that of course CO2 emissions are only one kind of air pollution and that the

results found in this research are not representative for the trends of other kinds of (air) pollution (Alsamara et al., 2018, p.33183). The ‘Middle East’ is also a term which can be interpreted multiple ways. In my thesis, I focus on the broad view of the Middle East, including the North African states and Turkey. Figure 5 highlights the states that I would like to take into account., and from where I will choose the four case studies. The Middle East is an interesting area to look at as it contains relatively many rich authoritarian regimes. These regimes directly seem to counter the theory that economic growth leads to democratization, making them interesting cases for the curves (Barro, 1999, p.182). Not only that, but there is a lot of diversity in the Middle East: it contains both democracies and authoritarian regimes, and LDCs and DCs.

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Figure 5: The MENA area. Retrieved from https://www.allaboutfeed.net/Compound‐Feed/Articles/2015/12/MENA‐ region‐driver‐for‐international‐trade‐2727340W/

The definition of ‘democratic regime’ is deserving of a paper of its own. However, with limited space, I shall attempt to conceptualize it here in just a few paragraphs. One basic principle of regimes in general is sovereignty: a state must be able to govern itself (Mulgan, 1968, p.5). Competition for power and elections are perhaps the most recognizable aspects of democracies: regular intervals in elections by citizens excludes those regimes where leaders are chosen by election but refuse to give up their power at a later moment (Linz, 2000, p.58). Other important principles of democracies are political equality and universal (adult) suffrage, and the necessary political freedoms to exercise political power (Mulgan, 1968, p.8).

However, how do we measure these principles? The Economist Intelligence Unit has categorized states with the assistance of the Freedom House Definition. Freedom House is an organization that has broken the principles of a democratic regime down into somewhat more measurable concepts under two categories: political rights and civil liberties (Freedom House, 2018). Each of these categories includes multiple concepts, and are measured on a scale from 1 to 7. They focus on the electoral process and pluralism first, second the functioning of government, third political participation, fourth political culture, and fifth civil liberties. Free and fair elections must be held, and citizens must receive enough political freedom to be able to vote (for example the freedom of speech and freedom of assembly) (The Economist Intelligence Unit, 2018, pp.46‐48). An important aspect of the categorization made by The Economist Intelligence Unit is that a democracy has to be functioning: being democratic on paper is not enough. Their categorization will be used in determining which states can be chosen as democracies in the Middle East.

Authoritarian regimes are often simply conceptualized by what they are not: they are not democratic, though like a democratic regime, the label ‘authoritarian regime’ entails sovereignty (Mulgan, 1968, p.5). Further, an authoritarian state does not have the institutions, procedures, and legislation for political participation and competition. Fundamental rights can be in place, though it is not a condition for the state or regime, and the rights that are in place are often limited (Lauth, 2012). The legal limits to these rights are decided by the rulers themselves and not by a separate

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body (Linz, 2000, pp.58‐59). An authoritarian regime is different from a totalitarian state, in that it is less far‐reaching with its political power in society (Linz, 2000, p.66).

Another important concept that needs to be specified is ‘economic development,’ and what an ‘economically developed country’ entails. The economic development of a state determines its expected place on the EKC. The economic position of a state will be based on GDP per capita, a common indicator of development among states (Bregar, Rovan & Pavsic, 2008). Of course GDP per capita is not a flawless method of measuring economic development. For example, it says nothing of the inequality in a state, and how GDP is divided among citizens. It is argued that the GDP cannot be used as an indicator of a country’s overall performance or welfare. However, GDP is still useful to measure marketed economic activity (Kubiszewski et al., 2013, p.57). Regarding the EKC, the GDP per capita is often used, and will also be used in this paper: general economic growth should be measured, and not per se welfare or social development (Cohn, 2008, p.33; Grossman & Krueger, 1995, p.361).

Now that these concepts have been specified, it is important to look at the comparison that will be done and the case studies that will be selected. For this paper I shall select four case studies: two developed states (one authoritarian and one democratic) and two underdeveloped states (again one authoritarian and one democratic) will be selected. Selecting the democratic regimes in the Middle East was fairly easy, as the choice was rather limited: according to the Economist Democracy Index only Tunisia and Israel were functioning democracies in the area (The Economist Intelligence Unit, 2018, p.32). The rates of their GDP per capita are very different, and therefore they qualify as one LDC and one DC. The authoritarian regimes were chosen based on the GDP per capita of Tunisia and Israel in 2017: the two states with a comparable GDP per capita were selected. Other than the GDP per capita and the regime types the selected states will be different on all aspects. Therefore, this study is a comparative study based on the most different systems design (MDSD).

One important side‐note is that of course Tunisia has only been an official democracy since 2011, making it debateable whether or not it is a good representative for a democratic LDC. However, first, there is very little choice, as Tunisia is the only democratic LDC according to the Economist Democracy Index. Second, some scholars do argue that there was already a gradual process of democratization taking place in Tunisia during the rule of Ben Ali, until the abrupt democratization of the Arab Spring took place (Cavatorta & Haugbølle, 2012, pp.187‐189). This process of democratization can strengthen the position of Tunisia as representing a democratic regime.

As illustrated in figure 4, the states with the most comparable GDP per capita were the United Arab Emirates and the Kingdom of Jordan. In 2017, the UAE has a GDP per capita of approximately 40,700 current USD, while Israel had a GDP per capita of 40,500 current USD. Tunisia had a GDP per capita of approximately 3,500 current USD, and Jordan is slightly more economically developed with a GDP per capita of approximately 4,100 USD per capita (The World Bank Group, 2019a). The GDP per capita and the CO2 emissions per capita will be measured from the sixties and seventies until 2014, limited

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Figure 4: Israel, the UAE, Jordan and Tunisia: GDP per capita (current USD) in comparison to the region, 1960 – 2017. Retrieved from https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?contextual=region&locations=IL‐JO‐TN‐AE This study is exploratory in nature, and therefore caution is required in the conclusion. With the comparison, basic trends and causes of the relationship between economic development and environmental degradation can be seen, but as only four case studies are being researched, the findings cannot be generalized easily. More research on a larger‐N scale would be necessary to determine whether the conclusions drawn here are more generally applicable. Nevertheless, the findings can give insights on the importance of regime type for environmental issues in the Middle East.

The following section will analyse whether the selected case studies, and the development of their CO2 emissions, behave as the EKC predicts.

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Chapter 3: Results

Developed Economies

This following section will analyse to what extent developed countries in the Middle East, Israel and the UAE, behave as the EKC predicts. According to the EKC, the two states should be further along the EKC, and therefore their CO2 emissions should show a downward trend. Israel has declared itself to be a democracy from the outset (Stone, 1999, p.175), and now it ranks first place in the region in the democracy ranking by The Economist, and 30th_{place globally (The}

Economist Intelligence Unit, 2018, p.32). If we look again at figure 4, we can see that the GDP per capita of Israel has developed quickly over the past fifty‐seven years. It seems to have had a fairly steady development, despite internal and external struggles, and living conditions have been rising (Rivlin, 2012, p.247). The UAE has made a remarkable development itself. Until 1971, it was a protectorate of the United Kingdom, with a very limited subsistence economy. It was tribal based, and the strongest man with the most support became leader (Forster, 2017, pp.36‐37). This all changed with the discovery of oil in the 1950s and 1960s, which started two developments in the UAE. First, it united the emirates into a federation. The federal government of the UAE, which adopted a hereditary characteristic in each of the seven emirates, focused on developing the welfare of the people, believing that it would increase the support for the government and avoid political strife (Forster, 2017, p.44; Peck, 2001, p.149). This strategy seems to have been effective, as the emirates have enjoyed mostly political stability (Shihab, 2001, p.250). Second, it started a surge of economic development in the area. The GDP grew rapidly, though it fluctuated greatly with the price of oil. For example, in figure 4 we can see the economic downturn of the late 2000s (Foster, 2017, pp.42‐43). The UAE is not unique in these fluctuations. When we look at how the UAE compares to the region, we can see the states of the Gulf Cooperation Council (GCC), shown more accurately in figure 7, share these variations. The GCC is a cooperation between states with similar economic and political structures, as well as a similarity in dependence on natural resources. Their economies depend almost entirely on the production of oil and oil exports (Metwally, 2009, pp. 580‐581), and the fluctuations in their GDP were largely caused by fluctuations in the value of the crude oil subsector (Tawfik Al Sadik, 2001, p.211). In the UAE, the share of GDP earned through the extraction of oil grew rapidly, generating over 50 per cent of the GDP in the seventies and eighties. Since then, the portion of GDP generated through oil has decreased, but is still considerable (Government of Dubai, 2017, p.61; Tawfik Al Sadik, 2001, p.229). Nevertheless, the GDP per capita has grown rapidly, which, according to the EKC, puts the UAE in a developed position where CO2 emissions would decrease.

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Figure 5. UAE GDP per capita (current USD) in comparison to the region and the GCC 1965 – 2017. Retrieved from

https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?contextual=region&end=2017& locations=AE‐QA‐KW‐BH‐OM‐ SA&start=1975

What we next need to do is look at the CO2 emissions of the two states in the same period, and

determine whether any part of the EKC is visible in the developments. Figure 6. Israel and the UAE, CO2 emissions per capita 1960 – 2014 (metric tons per capita) as compared to the region. Retrieved from https://data.worldbank.org/indicator/EN.ATM.CO2E.PC?contextual= region&locations=IL‐AE In figure 6, the most notable thing is the enormous peak of CO2 emissions in the UAE in 1969. This peak relates to the finding of oil and gas in the area, and takes place before the independence of the

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seven emirates. Other points of interest we can see regarding the UAE are that first, the CO2 emissions are considerably higher than many of the surrounding states, including Israel. However, if we once again place the UAE next to the other GCC states, we see that all the GCC states have higher CO2 emissions than the rest of the Middle East, as shown in figure 7. Figure 7. GCC states CO2 emissions per capita as compared to the region 1960 – 2014 (metric tons per capita). Retrieved from https://data.worldbank.org/indicator/EN.ATM.CO2E.PC?contextual=region& locations= AE‐QA‐KW‐BH‐OM‐SA The GCC states are responsible for a substantial portion of CO2 emissions (Alsamara et al., 2018,

p.33184). However, though the UAE’s wealth and CO2 emissions are considerably higher than many

of the surrounding states, we can still discern something of the shape of the EKC. Since the enormous peak in 1969, and two more peaks around 1975 and 2000, the rate of CO2 emissions per capita has

almost continually gone down. According to Alsamara et al. (2018), all the GCC states who are so dependent on oil seem to follow the EKC, gradually decreasing environmentally degrading activities. Since the discovery of oil and the formation of the federation, the UAE economy has been very dependent on oil production. In an effort to reduce this dependency, the governments have promoted agricultural and industrial activities. With that, the service sector has also grown, increasing its share in the GDP. Though particularly industrial activities contribute to CO2 emissions, the oil sector contributes much more, and therefore a diversification of the economy has only led to a decline in CO2 emissions (Shihab, 2001, pp.251‐254). The UAE does not stand still when it comes to legislation to protect the environment, though this is not focused much on the reduction of CO2 emissions. The main focus seems to be the protection of wildlife and creating ecoregions where the environment is left undisturbed. Since 1993 the central government set up the Federal Environment Agency which coordinates these projects (Aspinall, 2001, pp.278‐296). However, what does the UAE do about their CO2 emissions? Though the UAE

invests so much in resources which emit a lot of CO2, such as their oil reserves, the government has

decided in 2006 to integrate nuclear energy resources into their production of electricity, in order to lower CO2 emissions (AlFarra & Abu‐Hijleh, 2012, p.272; World Nuclear Association, 2019). This

would not only avoid pollution, but also create a new source of energy when the oil reserves finish: the reserves of uranium, which is necessary for nuclear energy, are estimated to last much longer.

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This would increase the energy security of the UAE, as they would not have to resort to importing energy. This affects the amount of CO2 emissions, improving environmental quality. This fits with the

downward slope on the EKC you would expect for a developed country.

To what extent does Israel as a democracy differ? In figure 8 we see the development of the CO2

emissions of Israel in more detail. As we can see, after a peak in 2001, the CO2 emissions have started

dropping, getting into a proper downward slope since 2012. If we compare it to the development of the GDP per capita in figure 4, it seems like the turning point for the EKC for Israel lies around a GDP per capita between 20.000 and 30,000 current USD.

Figure 8. Israel CO2 emissions per capita 1960 – 2014 (metric tons per capita). Retrieved from

https://data.worldbank.org/indicator/EN.ATM.CO2E.PC?locations=IL

For a long time, Israel’s environmental policy was similarly limited like that of other developed states around the world (the US, Japan and the EU): until the second half of the 1960s environmental protection received no attention. Environmental degradation then got public support in a number of Western democracies, and in Israel (Vogel, 1998, pp.246‐250). It was only in the 70s and 80s that Israel started to lag behind other developed Western nations. Though they had an Environment Ministry, economic development and physical security were and are still priority number one. For example, neither the agriculture nor transport policies took environmental degradation into account (Vogel, 1998, p.251‐256). Also for voters the priorities have been focused mostly on physical security issues, and not on the environment (Nossek, 2019). Israel did have some effective environmental policy, though it was focused more on nature conservation and reforestation, and not on pollution and solid waste. Moreover, many of the laws concerning environmental protection were not enforced effectively (Vogel, 1998, pp.253‐254).

Nevertheless, CO2 emissions in Israel have gone down. In the Kyoto Protocol of 1997, Israel agreed to

reduce the its CO2 emissions. Not only that, but the Israeli government is also looking at the

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have much to do with this, however. During country‐wide elections, security dominates the agenda, as was the case with the latest elections in 2019 (Gadzo, 2019). However, citizens do raise their voice regarding environmental issues when it comes to local governments (Doron & Yuval, 2014, pp.470‐ 472). However, there is of course a big difference between local governments, mainly based on how wealthy they are: the wealthier the locality, the more likely its citizens demand environmental quality (Doron & Yuvai, 2014, pp.480‐481).

To conclude, with developed states, it does not seem to matter whether or not the regime is authoritarian or democratic. Both the UAE and Israel have reserved resources to reduce CO2

emissions and improve the environment in other ways. In Israel citizens do not use their position in the democracy to demand more attention for environmental issues on the nationwide scale, rather the local governments have to deal with it. Therefore, it is difficult to say whether the democracy in Israel really makes a difference for environmental policy, and it seems as if it does not. Both the UAE and Israel’s CO2 emissions are decreasing, which corresponds to their position as developed

economies on the EKC.

Developing Economies

If we follow the theory of the EKC, we should expect that our case studies of developing countries, Tunisia and Jordan, show only an increase in CO2 emissions, as their economic development would still be in the first half of the EKC curve. Figure 9. Tunisia and Jordan GDP per capita (current USD) 1965 ‐ 2017. Retrieved from https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?contextual=default&locations=TN‐JO If we look at the development of the GDP per capita of Jordan and Tunisia more closely in figure 9, we see that although their GDP per capita is relatively low, it does show increase. It is interesting to note that Tunisia does show a drop in GDP per capita around 2011, when the Arab Spring occurred and Tunisia officially became a democracy. The Arab Spring and the following process of democratization were and are politically turbulent times in Tunisia, which affect the economic

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growth rate (Rachdi & Saidi, 2015, p.620). What is interesting about this transition to democracy, is that it occurred so early in economic development. Many scholars state that economic development is first necessary before a democracy can survive, but in the case of Tunisia, the bad economic situation and poor development were precisely the trigger for the Arab Spring and the following democratization (Pickard, 2014, p.264). This goes directly against the Lipset/Aristotle hypothesis which states that economic development is necessary to start the process of democratization (Barro, 1999, p.182). We next need to look at the development of the CO2 emissions in both states, shown in figure 10, and determine whether they follow the expected rise of the EKC or not. Both states seem to follow the expected line, as the CO2 emissions are steadily increasing in both cases. Regarding Tunisia, the new progresses of democratization and the stagnant economy are the most pressing issues at the moment, leaving little room for environmental policy (Pickard, 2014, p.264). To illustrate: Tunisia has a very low expenditure on research and development, leaving no resources to develop more environmentally friendly technologies (Amri, 2018, p.33696), import and export products are energy intensive, and the dominant energy sources in Tunisia are non‐renewable (Amri, 2018, pp.33698‐33699). In that regard, the state’s progress fits the expected line of the EKC. However, there are movements in Tunisia to increase the use of renewable energy in order to become less dependent on other states, to increase energy security, which could decrease CO2

emissions. Therefore, in the future the relationship between CO2 emissions and GDP development

per capita may look somewhat different (Ben Jebli & Ben Youssef, 2015, p.174). So far, though, it seems as if democratization in Tunisia has had no effect on the shape of the EKC: the CO2 emissions

behave as the EKC would predict.

Figure 10. Tunisia and Jordan CO2 emissions per capita 1960 – 2014 (metric tons per capita) 1960 ‐ 2017. Retrieved from

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Regarding the Kingdom of Jordan, we see a sharp rise in the CO2 emissions, though since the peak in

2005 with over 3.5 metric tons of CO2 emissions per capita, the degree has fallen slightly. We would

not yet expect a fall in CO2 emissions according to the Kuznets curve, as Jordan is still a developing

economy, and would therefore still be in the process of increasing environmental degradation. One reason why CO2 emissions are lower than expected (and lower than Tunisia), is that the Jordanian

government has updated its energy master plan to rely less on oil, as the fluctuations in oil price have great effect on the economy of Jordan. More nuclear energy and renewable resources are being used, decreasing the relative output of CO2 emissions (Mugableh, 2015, p.98). Like in Tunisia’s future

plans, this is linked to the idea of energy security, more perhaps than a desire to stop environmental degradation.

To conclude, it seems as if in LDCs the regime type does not matter at all: both Tunisia and Jordan follow the expected line of the EKC. Furthermore, the main reason why both states are looking to reform their energy use and its accompanying CO2 emissions is energy security, and not

environmental sustainability.

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Conclusion

In this analysis of the effects of regime type on the relationship between environmental degradation and economic development, the original hypothesis was discarded. There did not seem to be any difference between democratic regimes and authoritarian regimes, neither in DCs nor LDCs. The CO2

emissions of all four states acted as the EKC would predict, though the Kingdom of Jordan may prove to be an exception in the future. Reducing the impact on the environment seemed to be relatively important in both the chosen developed states, and energy security played a role in all four states. Other factors could influence the relationship between environmental degradation and economic development, and from this research it seems that particularly energy security is a much more important factor than regime type. In this regard it could be useful to research the difference in the relationship between environmental degradation and economic development in states that already have a certain degree of energy security, and states that are working towards it.

This research does have its limitations, however. First, as mentioned before, CO2 is only one indicator

of environmental degradation, and therefore the scope of this research is limited. It could be deepened considerably if other indicators of environmental degradation were also looked at. Second, this research looks at a relatively short period of time, no more than a few decades, while the results could say more If they were measured on a longer term. Kuznets himself measured three states for a period of over one hundred years for his original Kuznets Curve, and therefore perhaps this research is too short‐term (Kuznets, 1955). The systems of economics and the environment are quite complicated, with preferences of individuals, groups and the international community that need to be brought together. Planning different processes and bringing them into a whole is complicated and will be different from time to time, and from place to place. Longer‐term monitoring would be less influenced by these changing preferences (Hayek, 1944, pp. 67‐70). Third, this research focused on solely the Middle East, a region with often relatively high political instability. This can influence both the economy and CO2 emissions (Mohanty, Nandha, Turkistani & Alaitani, 2011, p.44), and therefore

it is important to keep in mind that this study is not representative for other areas of the world. Fourth, the position of Tunisia as a representative of a democratic LDC is complicated, as it is a relatively young democracy.

More research is necessary to better understand the relationship between environmental degradation and economic development. Political stability is a factor not previously taken into account in research regarding this relationship, and therefore more research on that could lead to new insights. Furthermore, the influence of regime type in other areas of the world could be researched, as well as the influence of the desire for energy security in other areas. Another aspect that could be researched in future is whether or not there is a difference in parameters for democratic and authoritarian regimes. All in all, much more research has to be done continually to monitor and theorize on this relationship.

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