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Economic growth and its impact on environment: A panel data analysis


  • Asici, Ahmet Atıl


This paper aims to explore the relationship between the economic growth and the pressure on nature from the environmental sustainability perspective. We measure pressure on nature as the sum of energy, mineral, net forest depletions and carbon dioxide damage, all measured in US dollars. The data is taken from the Adjusted Net Savings data of World Bank. Our panel consists of 213 countries and spans the period between 1970 and 2008. To investigate the causal effect of economic growth on nature we employ two strategies; fixed-effects and fixed-effects instrumental-variables (IV) regressions. Cross-country analysis reveals that there is a positive relationship between income and pressure on nature. However, the relationship is not linear across countries; the effect is much stronger in middle-income countries than in low and high-income countries. Our results are robust to the inclusion of various covariates and moreover they do not support the Environmental Kuznets Curve hypothesis which foresees a reduction in environmental degradation once a certain level of development is reached.

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  • Asici, Ahmet Atıl, 2011. "Economic growth and its impact on environment: A panel data analysis," MPRA Paper 30238, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:30238

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    References listed on IDEAS

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    Cited by:

    1. Anamika Barua & Bandana Khataniar, 2015. "Strong or weak sustainability: a case study of emerging Asia," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 22(1), pages 1-31, June.
    2. Aleksandras Vytautas Rutkauskas & Viktorija Stasytytė & Nijolė Maknickienė, 2014. "Government debt as the integral portfolio of assets and liabilities generated by debt," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 15(1), pages 22-40, February.
    3. Muhammad Shahbaz & Samia Nasreen & Ilhan Ozturk, 2016. "FDI, Growth and CO2 Emissions Relationship: Evidence from High, Middle and Low Income Countries," Bulletin of Energy Economics (BEE), The Economics and Social Development Organization (TESDO), vol. 4(1), pages 54-69, March.
    4. Muhammad Shahbaz & Samia Nasreen & Talat Afza, 2014. "Environmental Consequences of Economic Growth and Foreign Direct Investment: Evidence from Panel Data Analysis," Bulletin of Energy Economics (BEE), The Economics and Social Development Organization (TESDO), vol. 2(2), pages 14-27, June.

    More about this item


    Adjusted Net Saving; Genuine Saving; Sustainability; Panel data;

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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