A Literature Survey of the Environmental Kuznets Curve

Abstract

Since the 1970s, the issue of environmental degradation has received considerable attention. Environmental Kuznets curve is one of the most well-known hypotheses that explains the relationship between economic growth and environmental pollution. It represents an important model that enables policymakers to deliver quality information-based decisions. In this paper we provide the theoretical framework of the Environmental Kuznets curve and examine existing literature on the EKC hypothesis. The systematic literary survey includes studies conducted for single countries as well as for group of countries. The most of the studies were testing empirically existence of inverted U-shaped relationship between economic growth and carbon dioxide emissions. Due to the chosen time period, set of independent variables and methodological framework, the results are inconclusive in nature, which is consistent with previous literature surveys on the same topic.

The relationship between economic growth and environmental degradation: could West African countries benefit from EKC hypothesis?

“…ED which is the outcome variable is widely measured using CO 2 (Akadiri et al 2019 ; Ntarmah et al 2020 ; Kong et al 2020 ; Aslam et al 2021 ; Shabani et al 2021 ; Ntarmah et al 2021 ). GDP is selected for the study due to the theoretical proposition of EKC that put forward three channels (scale, composition, and technique effects) through which GDP affects ED (Kurznets 1955; Mitić et al 2019 ; Halliru et al 2020 ). The scale effect indicates that GDP increases ED due to higher production volumes that require greater exploitation of natural resources and harmful emissions (Owusu and Asumadu-Sarkodie 2016 ; Sarkodie and Strezov 2019 ).).…”

“…The scale effect indicates that GDP increases ED due to higher production volumes that require greater exploitation of natural resources and harmful emissions (Owusu and Asumadu-Sarkodie 2016 ; Sarkodie and Strezov 2019 ).). The composition effect implies that GDP could improve or worsen the environment, subject to the structural changes in the economy (Mitić et al 2019 ). As a country’s income rises, a structural shift in the economy from agricultural to industrial activity raises ED, whereas a shift from energy-intensive industries to services and knowledge-based innovations and technologies lowers ED.…”

“…The general notion that an increase in GDP increases CO 2 (Kahia et al 2019 ; Rahman and Vu 2020 ; Mensah et al 2021 ) implies that economic expansion in West Africa will continually escalate CO 2 in the region. However, the environmental Kuznets curve (EKC) hypothesis provides a framework for examining growth-environmental relationships through three channels: (1) scale effect (increased GDP adversely affects the environment), composition effect (structural changes could worsen or improve the environment), and technique effect (economic advancement promote environment by shifting toward more environmentally friendly technologies and regulations) (Mitić et al 2019 ). Thus, EKC is one of the most well-known hypotheses that explain the relationship between GDP and ED (Apergis 2016 ; Dogan and Inglesi-Lotz 2017 ; Mitić et al 2019 ; Ntarmah et al 2022 ).…”

“…However, the environmental Kuznets curve (EKC) hypothesis provides a framework for examining growth-environmental relationships through three channels: (1) scale effect (increased GDP adversely affects the environment), composition effect (structural changes could worsen or improve the environment), and technique effect (economic advancement promote environment by shifting toward more environmentally friendly technologies and regulations) (Mitić et al 2019 ). Thus, EKC is one of the most well-known hypotheses that explain the relationship between GDP and ED (Apergis 2016 ; Dogan and Inglesi-Lotz 2017 ; Mitić et al 2019 ; Ntarmah et al 2022 ). It represents an important model that enables policymakers to deliver quality information–based decisions.…”

“…Although there are many growth-environmental studies across the world, the results are diverse. Some scholars established a linear/monotonic relationship (Akadiri et al 2019 ; Destek and Sinha 2020 ; Khan et al 2021 ; Dimnwobi et al 2021 ; Mensah et al 2021 ), but no significant relationship (Omri et al 2015 ; Bekhet et al 2017 ; Charfeddine and Kahia 2019 ), U-shaped (Xu et al 2020 ), inverted U-Shaped–EKC (Al-Mulali et al 2016 ; Halliru et al 2020 ; Ntarmah et al 2021 ), N, or inverted N shape (Mitić et al 2019 ; Sarkodie and Strezov 2019 ). From the perspective of selected countries in West Africa, Halliru et al ( 2020 ) found a U-shaped relationship, while Omojolaibi ( 2010 ) found an inverted-U shaped with OLS but FE regression revealed no significant relationships between GDP and environment.…”