New insights into the environmental Kuznets curve hypothesis in developing and transition economies: a literature survey

We perform an updated literature survey on pollution-growth nexus via the environmental Kuznets curve (EKC) hypothesis, both from theoretical and empirical standpoints. First, we conduct a literature review on the most well-known rationale behind the EKC prevalence and discuss the key components of the research design when estimating the EKC. Second, we bring together the most influential empirical papers published in the last decade, which focus on EKC estimation in developing and transition economies. Overall, succeeding to curtail some of the deficiencies suggested by theoretical contributions, the recent empirical studies might indicate a certain consensus regarding pollution-growth nexus, and EKC validity. On one hand, reinforcing the EKC nature, several studies reveal a long-run relationship between indicators. On the other hand, according to income coefficients’ signs, the traditional bell-shaped pattern seems to be at work for some developing and transition economies. However, in some cases, the estimated turning point lies outside the income sample range, calling into question not only the true pattern between pollution and growth but also the identification of EKC. Taken collectively, both the theoretical foundations and empirical evidence, could contribute to a better understanding of the pollution-growth nexus in the EKC context, and suggest some useful insights into the future works on the subject as well as the crucial policy implications in this group of countries.