International Relations in the Environmental Kuznets Curve - Theoretical Considerations

Purpose: This study aims to develop the economic model of the environmental Kuznets curve that would show the effect of international trade on the environment's aggregate pollution. Design/Methodology/Approach: We will examine two areas with different economic policies. Following the commonly adopted terminology, the first, more developed area will be called Home Country (Home), while the other one – Foreign Country (Foreign). Home and Foreign are placed in different environmental Kuznets curves. Findings: In this economic model, the trade exchange results in increased growth of both countries, affecting the degradation of their environment, with the perspective of the turning point being crossed faster in a less developed country. This is a new point of view in the literature on the subject. Practical Implications: General recommendations that can be formulated based on the model include, among others, influencing the income elasticity of demand for environmental quality. This can be done by increasing economic policies to support structural changes in the economy, get the public sector more involved in environmental protection, and raise social awareness of the necessity to protect the environment. Originality/Value: The environmental Kuznets curve concept got spread at the beginning of the 1990s. However, it has not been used to refer to the effects of international economic relations, e.g., trade, which have increasingly influenced economic growth today. The model presented in the article contributes to filling this gap.