REVISITING THE ENVIRONMENTAL KUZNETS CURVE: A PANEL DATA ANALYSIS

Abstract

This research paper examines the empirical relationship between environmental quality (CO₂ emissions), economic growth, urbanization, and trade openness by using panel data of 31 years over the period of 1990 to 2020 of 15 countries. These 15 countries have been selected on the basis of low, moderate to high, and very high human development index categories as classified in indiastat.com. We used unit root test and cointegration test to verify the stationarity and the existence of long run relationship among the selected variables. Next, fixed effects and random effects models have been deployed for verifying the EKC hypothesis. Factual evidence disclosed that trade openness and population growth reduces CO₂ emissions. The existence of the EKC was also confirmed by the data. Further, the pairwise Granger causality test conducted demonstrates that CO2 emissions and GDP are causally related in both directions.

Keywords: Environment quality, Economic growth, Environmental Kuznets Curve, Trade openness, Urbanization, Population growth.