Going beyond the traditional EKC hypothesis: a panel quantile approach

ABSTRACT

The traditional environmental Kuznets curve (EKC) hypothesis focuses on the relationship between economic growth and a few types of pollutants. Moreover, most previous studies examined EKC based on ‘Black-box structure’ rather than decomposed form. Therefore, this study investigates the effect of decomposed growth on environmental quality for 108 countries from 2000–2018 using the panel mean and quantile regressions. The panel data result confirms that most countries’ environment is worse because of the scale and technique effects, which supports the rising part of EKC. But, the quantile result reveals that the relationship between decomposed growth and environmental quality is insignificant in most quantiles in most countries. Therefore, countries need to achieve more environment-friendly economic activities and technologies, develop a self-correcting mechanism, and apply the Porter hypothesis.

KEYWORDS:

• Decomposed growth
• EKC hypothesis
• panel quantile

Acknowledgments

The author sincerely thanks the anonymous reviewers and the Editor for all their help.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. Shown by a significant coefficient of (GDP/km²)².

2. Technological development reduces environmental damage.

3. Negative and non-linear (but not U-shape) relationship, coincides with panel mean result.

4. Negative and non-linear (U-shape), supports the EKC.

5. U-shape relationship, supports the EKC.

6. Negative and non-linear (but not U-shape), supports the increasing section of EKC.