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Openness and the Environmental Kuznets Curve: Evidence from China

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  • Jayanthakumaran, Kankesu
  • Liu, Ying

Abstract

This paper investigates the relationship in China between trade, growth and emissions using provincial-level data for water (chemical oxygen demand: COD) and air (sulphur dioxide: SO2). It analyses the period 1990–2007 in three steps. First, the income ‘turning point’ of the Environmental Kuznets Curve (EKC) has been estimated using quadratic log function and obtained a turning point consistent with existing studies. Second, adopting Dean's (2002) simultaneous equations system, the relationships between trade, growth and emissions has been estimated and the results confirm the dominance of scale effects over technique effects. Third, the estimated per capita turning point for EKC is used to split the provincial industrial database into two groups (below and above turning point income) and simultaneous equations are estimated separately for them. The split sample provided limited support for the trade-induced emissions hypothesis for COD, but not for SO2. At the provincial level rising incomes via increased levels of international trade were associated with falling COD due to the technique effect, so that rising incomes among the provinces tended to be associated with lower emissions. Stricter environmental regulations are required for growing incomes because they may encourage better production techniques.

Suggested Citation

  • Jayanthakumaran, Kankesu & Liu, Ying, 2012. "Openness and the Environmental Kuznets Curve: Evidence from China," Economic Modelling, Elsevier, vol. 29(3), pages 566-576.
  • Handle: RePEc:eee:ecmode:v:29:y:2012:i:3:p:566-576
    DOI: 10.1016/j.econmod.2011.12.011
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    1. Werner Antweiler & Brian R. Copeland & M. Scott Taylor, 2001. "Is Free Trade Good for the Environment?," American Economic Review, American Economic Association, vol. 91(4), pages 877-908, September.
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    3. Thomas Jobert & Fatih Karanfil & Anna Tykhonenko, 2014. "Estimating country-specific environmental Kuznets curves from panel data: a Bayesian shrinkage approach," Applied Economics, Taylor & Francis Journals, vol. 46(13), pages 1449-1464, May.
    4. Tiba, Sofien & Omri, Anis, 2017. "Literature survey on the relationships between energy, environment and economic growth," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 1129-1146.
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    Keywords

    COD and SO2 emissions; Environmental Kuznets curve (EKC); Openness;

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