Testing environment Kuznets curve (EKC) hypothesis in different regions
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RESEARCH ARTICLE
Testing environment Kuznets curve (EKC) hypothesis in different regions Fatima Bibi 1
&
Muhammad Jamil 2
Received: 29 August 2020 / Accepted: 2 November 2020 # Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract This study examines the association between air pollution and economic growth based on the idea of environment Kuznets curve (EKC) hypothesis which suggests an inverted U-shaped link between air pollution and economic growth in six different regions including Latin America and the Caribbean, East Asia and the Pacific, Europe and Central Asia, South Asia, the Middle East and North Africa, and Sub-Saharan Africa over the period 2000 to 2018. This regional classification is done to investigate the regional differences of the EKC relationship for carbon emissions. Models based on panel data econometric models are employed to obtain empirical results. Random effect and fixed effect models are used in the present study. A multivariate framework is used in which carbon dioxide emission, per capita gross domestic product, trade openness, foreign direct investment, primary school enrollment, financial development indicator, and institutional quality that is measured by six indicators are included. The result is that the EKC hypothesis is supported in all the abovementioned regions except in the Sub-Saharan Africa region. Thus, the hypothesis that different regions have dissimilar EKC relationships is supported through the results of this research study. Keywords Environment Kuznets curve (EKC) . Panel data estimation . Carbon dioxide emission . Geographic analysis . Economic development JEL Classification Q56 . O1 . C23
Introduction World economies tend to reduce CO2 emissions due to the adverse effects of climate change. Developing countries are responsible for large emissions of CO2 because of their fasteconomic growth and hence suffer from environmental degradation. In the current situation, there is no concession on achieving high economic growth at the expense of the Responsible editor: Nicholas Apergis * Fatima Bibi [email protected] Muhammad Jamil [email protected] 1
School of Economics, Quaid-i-Azam University, Islamabad, Pakistan
2
Ghulam Ishaq Khan Memorial Chair, Kashmir Institute of Economics, The University of Azad Jammu & Kashmir, Muzaffarabad, Pakistan
environment due to pollution, global warming, and high utilization of non-renewable resources. Therefore, environmentalfriendly economic growth is need of the hour (Ahmed and Long 2012). The improvement in the environment with an increase in per capita income is reflected through the environment Kuznets curve (EKC). There are regional differences when it comes to the relationship between air pollution and economic growth. The environment Kuznets curve (EKC) hypothesis does not exist in those regions in which most of the countries are low income and their income level is below the turning point. Economic growth and development remain the esteemed goal of every government. To achieve this goal, it increases
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