IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/54461.html
   My bibliography  Save this paper

Environmental Quality and Economic Growth: A Panel Analysis of the "U" in Kuznets

Author

Listed:
  • F. Akpan, Usenobong
  • E. Abang, Dominic

Abstract

The primary motivation behind this study was to search for evidence of the link between environmental quality and economic growth so as to answer the relevant question of whether economic growth alone could serve as a long-run solution to environmental damage as implied by EKC hypothesis. Here we analyze the relationship using a panel of 47 countries over the period 1970 -2008. Using Random-effect estimation and two-stage least square, our results leads to the following conclusions: relying on a quadratic model can easily mislead researchers to ratify the existence of EKC; the EKC hypothesis ceased to hold whenever an alternative functional form (cubic) is employed. At best, the relationship between economic growth and environmental quality is shown to be typified by an N-shaped curve. The paper maintained that simply waiting for an automatic arrival of a delinking point for environmental damage given long-run growth will not be a feasible solution to environmental quality. A number of feasible policy menu and critical questions to guide selection of the best instrument capable of bringing about a downturn in environmental damage have been suggested in the paper.

Suggested Citation

  • F. Akpan, Usenobong & E. Abang, Dominic, 2014. "Environmental Quality and Economic Growth: A Panel Analysis of the "U" in Kuznets," MPRA Paper 54461, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:54461
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/54461/1/MPRA_paper_54461.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. de Bruyn, S. M. & van den Bergh, J. C. J. M. & Opschoor, J. B., 1998. "Economic growth and emissions: reconsidering the empirical basis of environmental Kuznets curves," Ecological Economics, Elsevier, vol. 25(2), pages 161-175, May.
    2. Beckerman, Wilfred, 1992. "Economic growth and the environment: Whose growth? whose environment?," World Development, Elsevier, vol. 20(4), pages 481-496, April.
    3. Grossman, G.M & Krueger, A.B., 1991. "Environmental Impacts of a North American Free Trade Agreement," Papers 158, Princeton, Woodrow Wilson School - Public and International Affairs.
    4. Marzio Galeotti & Alessandro Lanza, 1999. "Desperately Seeking (Environmental) Kuznets," Working Papers 1999.2, Fondazione Eni Enrico Mattei.
    5. Munasinghe, Mohan, 1999. "Is environmental degradation an inevitable consequence of economic growth: tunneling through the environmental Kuznets curve," Ecological Economics, Elsevier, vol. 29(1), pages 89-109, April.
    6. Holtz-Eakin, Douglas & Selden, Thomas M., 1995. "Stoking the fires? CO2 emissions and economic growth," Journal of Public Economics, Elsevier, vol. 57(1), pages 85-101, May.
    7. Gene M. Grossman & Alan B. Krueger, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(2), pages 353-377.
    8. He, Jie & Richard, Patrick, 2010. "Environmental Kuznets curve for CO2 in Canada," Ecological Economics, Elsevier, vol. 69(5), pages 1083-1093, March.
    9. Agras, Jean & Chapman, Duane, 1999. "A dynamic approach to the Environmental Kuznets Curve hypothesis," Ecological Economics, Elsevier, vol. 28(2), pages 267-277, February.
    10. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    11. Panayotou T., 1993. "Empirical tests and policy analysis of environmental degradation at different stages of economic development," ILO Working Papers 992927783402676, International Labour Organization.
    12. Heil, Mark T. & Selden, Thomas M., 2001. "Carbon emissions and economic development: future trajectories based on historical experience," Environment and Development Economics, Cambridge University Press, vol. 6(1), pages 63-83, February.
    13. Cole, Matthew A., 2004. "US environmental load displacement: examining consumption, regulations and the role of NAFTA," Ecological Economics, Elsevier, vol. 48(4), pages 439-450, April.
    14. Maddala, G S & Wu, Shaowen, 1999. "A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-652, Special I.
    15. Caviglia-Harris, Jill L. & Chambers, Dustin & Kahn, James R., 2009. "Taking the "U" out of Kuznets: A comprehensive analysis of the EKC and environmental degradation," Ecological Economics, Elsevier, vol. 68(4), pages 1149-1159, February.
    16. Choi, In, 2001. "Unit root tests for panel data," Journal of International Money and Finance, Elsevier, vol. 20(2), pages 249-272, April.
    17. Godwin Effiong Akpan & Usenobong Friday Akpan, 2012. "Electricity Consumption, Carbon Emissions and Economic Growth in Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 2(4), pages 292-306.
    18. Friedl, Birgit & Getzner, Michael, 2003. "Determinants of CO2 emissions in a small open economy," Ecological Economics, Elsevier, vol. 45(1), pages 133-148, April.
    19. Akpan, Usenobong F. & Chuku, Agbai, 2011. "Economic Growth and Environmental Degradation in Nigeria: Beyond the Environmental Kuznets Curve," MPRA Paper 31241, University Library of Munich, Germany.
    20. G. S. Maddala & Shaowen Wu, 1999. "A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(S1), pages 631-652, November.
    21. Martinez-Zarzoso, Inmaculada & Bengochea-Morancho, Aurelia, 2004. "Pooled mean group estimation of an environmental Kuznets curve for CO2," Economics Letters, Elsevier, vol. 82(1), pages 121-126, January.
    22. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    23. Breitung, Jorg, 2002. "Nonparametric tests for unit roots and cointegration," Journal of Econometrics, Elsevier, vol. 108(2), pages 343-363, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Albino Prada-Blanco & Patricio Sanchez-Fernandez, 2017. "Empirical Analysis of the Transformation of Economic Growth into Social Development at an International Level," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 130(3), pages 983-1003, February.
    2. Muhammad Shahbaz & Avik Sinha, 2019. "Environmental Kuznets curve for CO2emissions: a literature survey," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 46(1), pages 106-168, January.
    3. Rafindadi, Abdulkadir Abdulrashid, 2016. "Revisiting the concept of environmental Kuznets curve in period of energy disaster and deteriorating income: Empirical evidence from Japan," Energy Policy, Elsevier, vol. 94(C), pages 274-284.
    4. Paunić, Alida, 2016. "Brazil, Preservation of Forest and Biodiversity," MPRA Paper 71462, University Library of Munich, Germany.
    5. Prada, Albino & Sanchez-Fernandez, Patricio, 2015. "Análisis del acoplamiento entre la riqueza y el desarrollo socioeconómico de las naciones [Analysis of the mismatch between wealth and socio-economic development of nations]," MPRA Paper 61067, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. He, Jie & Richard, Patrick, 2010. "Environmental Kuznets curve for CO2 in Canada," Ecological Economics, Elsevier, vol. 69(5), pages 1083-1093, March.
    2. Muhammad Bilal Khan & Hummera Saleem & Malik Shahzad Shabbir & Xie Huobao, 2022. "The effects of globalization, energy consumption and economic growth on carbon dioxide emissions in South Asian countries," Energy & Environment, , vol. 33(1), pages 107-134, February.
    3. Al Mamun, Md. & Sohag, Kazi & Hannan Mia, Md. Abdul & Salah Uddin, Gazi & Ozturk, Ilhan, 2014. "Regional differences in the dynamic linkage between CO2 emissions, sectoral output and economic growth," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 1-11.
    4. Dutta, Champa Bati & Das, Debasish Kumar, 2016. "Does disaggregated CO2 emission matter for growth? Evidence from thirty countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 66(C), pages 825-833.
    5. Aslanidis, Nektarios, 2009. "Environmental Kuznets Curves for Carbon Emissions: A Critical Survey," Working Papers 2072/15847, Universitat Rovira i Virgili, Department of Economics.
    6. Tiba, Sofien & Belaid, Fateh, 2020. "The pollution concern in the era of globalization: Do the contribution of foreign direct investment and trade openness matter?," Energy Economics, Elsevier, vol. 92(C).
    7. Aslanidis Nektarios, 2009. "Environmental Kuznets curves for carbon emissions: A critical survey," wp.comunite 0051, Department of Communication, University of Teramo.
    8. Chuku, Agbai, 2011. "Economic development and environmental quality in Nigeria: is there an environmental Kuznets curve?," MPRA Paper 30195, University Library of Munich, Germany.
    9. Bilgili, Faik & Koçak, Emrah & Bulut, Ümit, 2016. "The dynamic impact of renewable energy consumption on CO2 emissions: A revisited Environmental Kuznets Curve approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 54(C), pages 838-845.
    10. Chen, Ping-Yu & Chen, Sheng-Tung & Hsu, Chia-Sheng & Chen, Chi-Chung, 2016. "Modeling the global relationships among economic growth, energy consumption and CO2 emissions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 65(C), pages 420-431.
    11. Sinha, Avik & Shahbaz, Muhammad & Balsalobre, Daniel, 2017. "Exploring the Relationship between Energy Usage Segregation and Environmental Degradation in N-11 Countries," MPRA Paper 81212, University Library of Munich, Germany, revised 07 Sep 2017.
    12. Nektarios Aslanidis, 2009. "Environmental Kuznets Curves for Carbon Emissions: A Critical Survey," Working Papers 2009.75, Fondazione Eni Enrico Mattei.
    13. Hatem M'henni & Mohamed El Hedi Arouri & Adel Ben Youssef & Christophe Rault, 2011. "Income Level and Environmental Quality in The MENA Countries: Discussing the Environmental Kuznets Curve Hypothesis," Working Papers 587, Economic Research Forum, revised 05 Jan 2011.
    14. Fateh Belaïd, Sabri Boubaker, Rajwane Kafrouni, 2020. "Carbon emissions, income inequality and environmental degradation: the case of Mediterranean countries," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 17(1), pages 73-102, June.
    15. Linna Chen & Shiyi Chen, 2015. "The Estimation of Environmental Kuznets Curve in China: Nonparametric Panel Approach," Computational Economics, Springer;Society for Computational Economics, vol. 46(3), pages 405-420, October.
    16. Wagner, Martin, 2008. "The carbon Kuznets curve: A cloudy picture emitted by bad econometrics?," Resource and Energy Economics, Elsevier, vol. 30(3), pages 388-408, August.
    17. Dinda, Soumyananda, 2004. "Environmental Kuznets Curve Hypothesis: A Survey," Ecological Economics, Elsevier, vol. 49(4), pages 431-455, August.
    18. Marzio Galeotti & Matteo Manera & Alessandro Lanza, 2006. "On the Robustness of Robustness Checks of the Environmental Kuznets Curve," Working Papers 2006.22, Fondazione Eni Enrico Mattei.
    19. Jobert, Thomas & Karanfil, Fatih & Tykhonenko, Anna, 2013. "On the structure and form of the GDP–nuclear nexus: New perspectives and new findings," Energy Policy, Elsevier, vol. 62(C), pages 1553-1561.
    20. Bingjie Xu & Ruoyu Zhong & Yifeng Liu, 2019. "Comparison of CO 2 emissions reduction efficiency of household fuel consumption in China," Sustainability, MDPI, vol. 11(4), pages 1-13, February.

    More about this item

    Keywords

    Economic growth; EKC hypothesis; Environmental quality; delinking;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:54461. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.