Empirical testing of the environmental Kuznets curve: evidence from 182 countries of the world

Abstract

Sustainability is to attain a better quality of life for a long period of time. Accomplishment of sustainable environment is a major challenge for all economies of the world. The Environmental Kuznets Curve (EKC) hypothesis elucidates the association between economic activity and environmental quality deterioration. Therefore, the broad aim of this study is to explore the validity of the EKC hypothesis using real gross domestic product and carbon dioxide (CO2) emissions along with other variables, for 182 countries based on annual time series data. The countries are categorized into four income groups (low, lower-middle, upper-middle, and higher-income countries) according to the World Bank classification. The fully modified ordinary least squares estimator is used for estimation. The empirical results confirm the presence of an EKC (inverted U-shaped relationship) in 11 low-income, 15 lower-middle-income, 34 upper-middle-income, and 24 high-income countries out of 182 countries, while in the remaining countries, the relationship between growth and CO2 emissions is U-shaped. Additionally, the positive impact of energy use and population growth on CO2emissions is consistent with the hypothesis. Therefore, this study concludes that the EKC hypothesis holds true in 84 countries. These findings suggest that governments should prioritize low carbon emissions and green technology to achieve sustainable development. © The Author(s), under exclusive licence to Springer Nature B.V. 2024.

Keywords: CO2 emissions, EKC, FMOLS, Global data.