This study examines to what extent recent empirical evidence can substantiate the claim that annual emission constraints have a modest effect on long run economic growth rates. The paper studies specifically the contribution of carbon dioxide emissions on growth in Egyptian economy during the period 1961–2008. Results indicate that there is a negative relationship between GDP per capita and carbon dioxide emissions. Results suggest that institutions play an important role to achieve progress in setting an effective policies and regulations to decrease pollutants’ level that arise from industries and rationalising the consumption of energy. Developing countries and especially Egypt need to adopt a set of effective policies to face the vulnerable growth and environmental degradation. Based on these results, we assert that environmental policy should consider the different characteristics of each country and type of pollutant.
Keywords: economic growth, energy, carbon dioxide emissions, Kuznets curve, green economics