IDEAS home Printed from https://ideas.repec.org/a/jda/journl/vol.50year2016issue5pp119-130.html
   My bibliography  Save this article

Estimating the relationship between economic growth and environmental quality for the brics economies - a dynamic panel data approach

Author

Listed:
  • Devleena Chakravarty
  • Sabuj Kumar Mandal

    (Indian Institute of Technology Madras, India)

Abstract

It has been forecasted by many economists that in the next couple of decades the BRICS economies are going to experience an unprecedented economic growth. This massive economic growth would definitely have a detrimental impact on the environment since these economies, like others, would extract their environmental and natural resource to a larger scale in the process of their economic growth. Therefore, maintaining environmental quality while growing has become a major challenge for these economies. However, the proponents of Environmental Kuznets Curve (EKC) Hypothesis - an inverted U shape relationship between income and emission per capita, suggest BRICS economies need not bother too much about environmental quality while growing because growth would eventually take care of the environment once a certain level of per capita income is achieved. In this backdrop, the present study makes an attempt to estimate EKC type relationship, if any, between income and emission in the context of the BRICS countries for the period 1997 to 2011. Therefore, the study first adopts fixed effect (FE) panel data model to control time constant country specific effects, and then uses Generalized Method of Moments (GMM) approach for dynamic panel data to address endogeneity of income variable and dynamism in emission per capita. Apart from income, we also include variables related to financial sector development and energy utilization to explain emission. The fixed effect model shows a significant EKC type relation between income and emission supporting the previous literature. However, GMM estimates for the dynamic panel model show the relationship between income and emission is actually U shaped with the turning point being out of sample. This out of sample turning point indicates that emission has been growing monotonically with growth in income. Factors like, net energy imports and share of industrial output in GDP are found to be significant and having detrimental impact on the environment in the dynamic panel model. However, these variables are found to be insignificant in FE model. Capital account convertibility shows significant and negative impact on the environment irrespective of models used. The monotonically increasing relationship between income and emission suggests the BRICS economies must adopt some efficiency oriented action plan so that they can grow without putting much pressure on the environment. These findings can have important policy implications as BRICS countries are mainly depending on these factors for their growth but at the same time they can cause serious threat to the environment.

Suggested Citation

  • Devleena Chakravarty & Sabuj Kumar Mandal, 2016. "Estimating the relationship between economic growth and environmental quality for the brics economies - a dynamic panel data approach," Journal of Developing Areas, Tennessee State University, College of Business, vol. 50(5), pages 119-130, Special I.
  • Handle: RePEc:jda:journl:vol.50:year:2016:issue5:pp:119-130
    as

    Download full text from publisher

    File URL: http://muse.jhu.edu/article/619651
    Download Restriction: no
    ---><---

    Citations

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


    Cited by:

    1. 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.
    2. Sinha, Avik & Sen, Sudipta, 2016. "Atmospheric consequences of trade and human development: A case of BRIC countries," MPRA Paper 100011, University Library of Munich, Germany.
    3. Shahbaz, Muhammad & Sinha, Avik, 2019. "Environmental Kuznets Curve for CO2 emission: A survey of empirical literature," MPRA Paper 100257, University Library of Munich, Germany, revised 2019.
    4. Sinha, Avik & Gupta, Monika & Shahbaz, Muhammad & Sengupta, Tuhin, 2019. "Impact of Corruption in Public Sector on Environmental Quality: Implications for Sustainability in BRICS and Next 11 Countries," MPRA Paper 94357, University Library of Munich, Germany, revised 05 Jun 2019.
    5. João Tovar Jalles, 2019. "Polluting Emissions and GDP: Decoupling Evidence from Brazilian States," Working Papers REM 2019/0104, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    6. Daniel Balsalobre‐Lorente & Oana M. Driha & George Halkos & Shekhar Mishra, 2022. "Influence of growth and urbanization on CO2 emissions: The moderating effect of foreign direct investment on energy use in BRICS," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(1), pages 227-240, February.

    More about this item

    Keywords

    Environmental Kuznets Curve; Generalized Method of Moments; Dynamic Panel Data Model;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F18 - International Economics - - Trade - - - Trade and Environment
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

    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:jda:journl:vol.50:year:2016:issue5:pp:119-130. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Abu N.M. Wahid (email available below). General contact details of provider: https://edirc.repec.org/data/cbtnsus.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.