New Evidence of Environmental Kuznets Curve Hypothesis in Developing Countries

Abstract

New indexes of environment and institutions are constructed following principal component analysis (PCA), while non-linear panel regression is employed. This study attempts to estimate a non-linear impact of GDP per capita on the environment following the Environmental Kuznets Curve (EKC) Hypothesis for 97 developing countries during 1991-2014. The study reveals that a traditional EKC shows a U-shaped relationship under static panels, with both quadratic and cubic regressions. Interestingly, the inverted U-shaped occurs when a traditional EKC is estimated by the dynamic panels, with both quadratic and cubic regressions. Moreover, the EKC model is inverted U-shaped following static and dynamic panels, with both quadratic and cubic regressions under institutions. Indeed, the institutions significantly contribute to express EKC in developing countries. Policymakers should formulate environmental policies following climate change mitigation in the environmental sustainability framework, improve the quality of institutions, and increase macroeconomic management to anticipate external shocks such as openness, globalization, and FDI inflows.

Nexus Between Economic Growth, Renewable Energy, Industry Value Added and CO2 Emissions in ASEAN

“…Specifically, the findings indicate empirical support for the EKC hypothesis in Brazil, China, India, Malaysia, Russia, Thailand, and Turkey. The existence of the EKC hypothesis has also been identified in various studies with different focuses, such as (Shahbaz et al, 2019) in Vietnam, (Ansari et al, 2020) in Asian countries, (Boubellouta & Kusch-Brandt, 2020) in European countries, (Prasetyanto & Sari, 2021) in Indonesia, and (Cahyadin et al, 2021) in Developing countries.…”

“…Furthermore, the impulse response analysis results suggest the need to strengthen the economic fundamentals of ASEAN countries to prevent shocks to GDP from worsening the CO 2 emission situation. Cahyadin et al (2021) explained that the dynamics of the global economy significantly will influence the environmental quality as developing countries like ASEAN actively elevate their economies to a global scale resulting in an increase in foreign investment, globalization, and economic openness. In addition, ASEAN countries are highly vulnerable to economic shocks from the global economy, such as international financial crises and fluctuations in oil prices, which subsequently affect GDP and CO 2 emissions (Roespinoedji et al, 2020).…”

Analysis of the Effects of Economic Growth and Development on Inequality and the Environment

“…In these nations, the study's findings support the EKC hypothesis. That is, the EKC hypothesis' projected economic expansion eventually leads to a decrease in pollution (CH4 emissions) after reaching a particular higher level; Apergis et al (2017), that the EKC hypothesis occurs in 10 US states; Cahyadin et al (2021), revealed that traditional EKC occurred in 97 developing countries during the period 1991-2014; Chen & Taylor (2020), assessed environmental quality in Singapore from 1900 to 2017 in the context of economic development and related phenomena utilizing heavy metals (chromium, Cr). After conducting an econometric study, the National Emissions Inventory (NEI) as-sessment determined that Singapore's Cr emission history is consistent with the EKC; Davidson et al (2021), based on dynamic data panel estimates with GMM and Russian regional data for 2004-2018, the EKC hypothesis was validated, implying an inverted U-shaped economic relationship between regional growth and CO2 emissions; Fasikha & Yuliadi (2018), that ASEAN country during the period 2005-2015 indicated the EKC hypothesis; Koirala & Mysami (2015), testing the inverted U-shaped EKC hypothesis was successful at the district level in the US using information on the net impact of forest resources on CO2 emissions and per capita income; Tiba & Frikha (2020), investigates a modified Kuznets curve for the environment that considers governance and human development factors affecting macroeconomic sustainability.…”

“…to estimate the Kuznets curve hypothesis with a nonlinear regression quadratic model(Cahyadin et al, 2021;Şentürk et al., 2020) + + (Equation 2) Information: WI = Williamson Index for the region i in year t Y = GRDP per capita for the region i in year t Y² = GRDP per capita squared region i in year t Comparison Between Sectors Through Certain Regions with Comparison AreasBy making a relative comparison, a reliable base sector will be found in economic growth and optimizing the economic development of a region, and the analysis uses Location Quotient(Khuluk et al, 2021;Saputra, 2016): added of national sector i N = National GDP Based on the above equation, to find the Location Quotient, the conditions are as follows:…”

“…the inverted U hypothesis on environmental issuesA quadratic nonlinear regression model is used to determine the projected decline(Cahyadin et al, 2021;Nikensari et al.Based on equations 2 and 5, to estimate the validity of the inverted Kuznets U curve hypothesis, it is based on the following conditions: If < 0, there is an inverted U-shaped relationship If > 0, there is no inverse U-shaped relationship This study uses a 95% Confident Interval or 0.05 RESULT AND DISCUSSION A. Economic Growth in Jambi Province Jambi province's economic growth during the 2010-2021 period had a positive trend, except in 2020, this year's economic growth contracted by -0.44% due to the COVID-19 pandemic.…”