Asymmetric effects of energy consumption and trade openness on CO2 emissions within the Environmental Kuznets Curve framework in Somalia

In plain language

An empirical analysis examines how energy consumption and trade openness asymmetrically influence carbon dioxide emissions in Somalia under the Environmental Kuznets Curve framework. The results indicate a stable long-run relationship among these factors. Increases in energy use worsen environmental degradation far more than decreases improve it, which is attributed to low energy efficiency and a reliance on fossil-fuel systems. Conversely, increased trade openness reduces emissions, whereas reductions in trade openness increase degradation, indicating that international trade integration assists sustainability through technology diffusion and efficiency gains. Overall, the analysis finds weak support for the conventional Environmental Kuznets Curve hypothesis, showing that economic growth alone cannot explain environmental trends in Somalia. Asymmetric energy use and trade patterns, rather than rising incomes, drive emissions outcomes, emphasising the need for renewable energy adoption, sustainable trade policies, and wider economic transformation.

Key takeaways

Positive shocks to energy consumption cause substantially larger increases in carbon dioxide emissions than negative shocks, highlighting reliance on inefficient fossil fuels.
Increases in trade openness reduce emissions through technology diffusion and efficiency gains, while decreases in trade worsen degradation.
The traditional Environmental Kuznets Curve hypothesis receives weak support in Somalia, showing that income growth alone does not determine environmental outcomes.
Carbon emissions in Somalia are primarily driven by asymmetric shifts in energy consumption and trade integration rather than income levels.

Why it matters

Understanding what drives emissions in developing nations helps policymakers design effective climate and economic strategies. In Somalia, economic expansion alone does not naturally lead to environmental improvement. Instead, emissions depend heavily on fossil-fuel usage and access to international trade. Promoting cleaner energy systems and open trade can support sustainable economic development without exacerbating environmental degradation.

Commercialisation angle

This early-stage macroeconomic research provides empirical evidence to inform energy policy, international trade agreements, and environmental planning. The findings could guide public sector decision-makers, development agencies, and renewable energy planners in prioritising clean technology transfers and modern energy infrastructure. The abstract does not indicate a direct commercial application pathway or specific industry product.

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Abstract

This study investigates the asymmetric effects of energy consumption and trade openness on carbon dioxide (CO 2 ) emissions in Somalia within the Environmental Kuznets Curve (EKC) framework using the Nonlinear Autoregressive Distributed Lag (NARDL) model. Augmented Dickey–Fuller (ADF) and Phillips–Perron (PP) unit root tests confirm a mixed order of integration, while the bounds test verifies the existence of a stable long-run cointegration relationship among the variables. The findings reveal significant asymmetric effects of both energy consumption and trade openness on CO 2 emissions. Positive shocks to energy consumption exert substantially larger effects on environmental degradation than negative shocks, reflecting Somalia’s dependence on fossil-fuel-based energy systems and low energy efficiency. In contrast, positive shocks to trade openness reduce emissions, whereas negative shocks increase environmental degradation, suggesting that trade integration improves Environmental degradation through technology diffusion and efficiency gains. The results provide weak empirical support for the EKC hypothesis, indicating that income growth alone does not adequately explain environmental outcomes in Somalia. Wald, diagnostic, and stability tests confirm significant asymmetry and model robustness. The study concludes that environmental degradation in Somalia is primarily driven by asymmetric energy and trade dynamics rather than income effects. The findings highlight the importance of renewable energy transition, sustainable trade integration, and structural economic transformation for environmental sustainability.

Research topics

Energy, Environment, Economic Growth
Market Dynamics and Volatility
Energy, Environment, and Transportation Policies

Discussion

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