Evaluating the impact of GDP per capita on environmental degradation for G-20 economies: Does N-shaped environmental Kuznets curve exist?

The extant literature reveals that scholars and policy makers are highly concerned about exploring the validity of the environmental Kuznets curve (EKC) hypothesis using a different set of variables with the prime objective of exploring environmental degradation issues related to sustainable economic development for different countries. We examine the validity of the EKC hypothesis for the five most influenced economies of the G-20 from 1993 to 2017 using GDP per capita and CO2 emissions, along with some other variables, namely technological development, financial development (FD), energy use, and social globalization to avoid any misspecification in the empirical model. The LM bootstrap approach confirms the co-integration in the series, and the panel Driscoll–Kraay standard error method confirms that veto-power economies have an N-shaped relationship between CO2 emissions and GDP per capita. Furthermore, empirical findings exhibit that technological advancement and energy consumption positively correlate with CO2 emissions, whereas FD and social globalization attenuate environmental degradation. These empirical findings suggest that appropriate policies need to be designed for these sample countries, depending on their GDP per capita and CO2 emissions levels. An environmentally friendly policy may be adopted to achieve sustainable development goals. Policymakers also need to implement a policy that encourages financial development and boosts technologies with fewer polluting characteristics.