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Environmental Quality and Economic Growth: A Panel Analysis of the "U" in Kuznets

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  • F. Akpan, Usenobong
  • E. Abang, Dominic

Abstract

The primary motivation behind this study was to search for evidence of the link between environmental quality and economic growth so as to answer the relevant question of whether economic growth alone could serve as a long-run solution to environmental damage as implied by EKC hypothesis. Here we analyze the relationship using a panel of 47 countries over the period 1970 -2008. Using Random-effect estimation and two-stage least square, our results leads to the following conclusions: relying on a quadratic model can easily mislead researchers to ratify the existence of EKC; the EKC hypothesis ceased to hold whenever an alternative functional form (cubic) is employed. At best, the relationship between economic growth and environmental quality is shown to be typified by an N-shaped curve. The paper maintained that simply waiting for an automatic arrival of a delinking point for environmental damage given long-run growth will not be a feasible solution to environmental quality. A number of feasible policy menu and critical questions to guide selection of the best instrument capable of bringing about a downturn in environmental damage have been suggested in the paper.

Suggested Citation

  • F. Akpan, Usenobong & E. Abang, Dominic, 2014. "Environmental Quality and Economic Growth: A Panel Analysis of the "U" in Kuznets," MPRA Paper 54461, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:54461
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Albino Prada-Blanco & Patricio Sanchez-Fernandez, 2017. "Empirical Analysis of the Transformation of Economic Growth into Social Development at an International Level," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 130(3), pages 983-1003, February.
    2. 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.
    3. Paunić, Alida, 2016. "Brazil, Preservation of Forest and Biodiversity," MPRA Paper 71462, University Library of Munich, Germany.
    4. Rafindadi, Abdulkadir Abdulrashid, 2016. "Revisiting the concept of environmental Kuznets curve in period of energy disaster and deteriorating income: Empirical evidence from Japan," Energy Policy, Elsevier, vol. 94(C), pages 274-284.
    5. Prada, Albino & Sanchez-Fernandez, Patricio, 2015. "Análisis del acoplamiento entre la riqueza y el desarrollo socioeconómico de las naciones [Analysis of the mismatch between wealth and socio-economic development of nations]," MPRA Paper 61067, University Library of Munich, Germany.

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    More about this item

    Keywords

    Economic growth; EKC hypothesis; Environmental quality; delinking;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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