Is environmental Kuznets curve a universal phenomenon?: - An econometric analysis of the existing studies

The impact of economic growth on environment has been a much debated topic among the economists and policy makers across the globe. From early 90’s estimation of Environmental Kuznets Curve (EKC) hypothesis emerged as a popular paradigm in academic discourses regarding growth environment relationship. EKC hypothesis states an inverted U relationship between income per capita and environmental degradation. At an initial level of development environmental degradation upsurges, and as income grows further beyond a point, environmental degradation slows down. Since EKC demonstrates economic growth as a cure for the environmental degradation and not as a cause for the same, large number of empirical studies have been conducted across the globe to examine the validity of EKC theory. But the available literature pertaining to the estimation of EKC hypothesis shows ambiguity in findings. Our present study makes an attempt to conduct a systematic review of 150 studies on EKC analysis along with its postulation, development over the years and methodological advancement. The objective of the paper is to examine whether EKC is a universal phenomenon or the findings of the studies depend on specific factors. The study conceptualized various factors namely, type of environmental indicators, measurement of environmental indicator, type of data set, income level of nations, econometric specification, and number of explanatory variables. After using a logit model we found that studies using panel data set, concentration per capita, multiple variable model, unit root tests have more probability of exhibiting EKC. However, studies are less likely to exhibit EKC once stationarity test is conducted in panel data. It implies that EKC is extremely context specific and not a universal phenomenon.