Environmental Kuznets Curve in D8 Countries: Evidence from Panel Cointegration

Year 2020, Issue: 32, 86 - 96, 26.11.2020

Hüseyin İçen

https://doi.org/10.26650/ekoist.2020.32.0011

Abstract

The environmental Kuznets curve (EKC) hypothesis has become an important factor in environmental studies in recent years. D8 members have viable economic positions in their respective regions due to their natural resources, crowded populations and potential markets sizes. This study deals with the validity of the EKC hypothesis for D8 countries between the years 1972 and 2014. The main contribution of this study to the literature is to identify the relationship between carbon emissions, GDP and energy use variables in D8 countries. Thanks to the model used, the relationship in the inverse N and N form was estimated and turning points were calculated. Furthermore, this relationship supports the N-shape environmental Kuznets curve hypothesis. In the light of these results, policymakers should immediately put policies in place that aim at reducing carbon emissions. The panel results of our study show that there is an inverse N-shaped relationship. The country with the highest per capita energy use and the highest carbon emission is Turkey, followed by Indonesia. In Malaysia, however , increase in per capita GDP causes a decrease in the carbon emission of per capita energy use. Therefore, Turkey and Indonesia's clean energy use needs to take steps towards encouraging production which implements the policy.

Keywords

Environmental Kuznets Curve, Panel Cointegration, D8 Countries

Supporting Institution

The authors declared that this study has received no financial support.

References

• Ahmed, K., & Long, W. (2012). Environmental Kuznets Curve and Pakistan: An Empirical Analysis. Procedia Economics and Finance, 1, 4–13.
• Allard, A., Takman, J., Uddin, G. S., & Ahmed, A. (2018). The N-shaped environmental Kuznets curve: an empirical evaluation using a panel quantile regression approach. Environmental Science and Pollution Research, 25(6), 5848-5861.
• Baek, J. (2015). Environmental Kuznets curve for CO2 emissions: the case of Arctic countries. Energy Economics, 50, 13-17.
• Balin, B. E., & Akan, D. M. (2015). EKC hypothesis and the effect of innovation: A panel data analysis. Journal of Business Economics and Finance, 4(1).
• Borghesi, Simone (1999). The Environmental Kuznets Curve: A Survey of the Literature, Nota di Lavoro, No. 85.1999, Fondazione Eni Enrico Mattei (FEEM), Milano
• Brajer, V., Mead, R. W., & Xiao, F. (2008). Health benefits of tunneling through the Chinese environmental Kuznets curve (EKC). Ecological Economics, 66(4), 674-686.
• Cho, C. H., Chu, Y. P., & Yang, H. Y. (2014). An Environment Kuznets Curve for GHG Emissions: A panel Cointegration Analysis. Energy Sources, Part B: Economics, Planning and Policy, 9(2), 120–129.
• Dasgupta, S., Laplante, B., Wang, H., & Wheeler, D. (2002). Confronting the Environmental Kuznets Curve. Journal of Economic Perspectives, 16(1), 147–168.
• De Bruyn, S. M., Van Den Bergh, J. C., & Opschoor, J. B. (1998) Economic Growth and Emissions: Reconsidering the Empirical Basis of Environmental Kuznets Curves. Ecological Economics, 25(2), 161-175.
• Dinda, S. (2004). Environmental Kuznets Curve Hypothesis: A Survey. Ecological Economics, 49(4), 431–455.
• Dong, K., Sun, R., Li, H., & Liao, H. (2018). Does Natural Gas Consumption Mitigate CO2 Emissions: Testing the Environmental Kuznets Curve Hypothesis for 14 Asia-Pacific Countries. Renewable and Sustainable Energy Reviews, 94(August 2017), 419–429.
• Farhani, S., Mrizak, S., Chaibi, A., & Rault, C. (2014). The Environmental Kuznets Curve and Sustainability: A Panel Data Analysis. Energy Policy, 71, 189–198.
• Grossman, G. M., & Krueger, A. B. (1991). Environmental Impacts of a North American Free Trade Agreement.
• Gündüz, H. İ. (2014). Çevre Kirliliği ile Gelir Arasındaki İlişkinin İncelenmesi: Panel Eşbütünleşme Analizi ve Hata Düzeltme Modeli. Marmara Üniversitesi İ.İ.B. Dergisi, 36(1), 409–423.
• Jebli, M. Ben, Youssef, S. Ben, & Ozturk, I. (2016). Testing Environmental Kuznets Curve Hypothesis: The Role of Renewable and Non-renewable Energy Consumption and Trade in OECD Countries. Ecological Indicators, 60(2016), 824–831.
• Kao, C., 1999. Spurious Regression and Residual-based Tests for Cointegration in Panel Data. Journal of Econometrics, 90, 1–44.
• Kasman, A., & Duman, Y. S. (2015). CO2 Emissions, Economic Growth, Energy Consumption, Trade and Urbanization in New EU Member and Candidate Countries: A Panel Data Analysis. Economic Modelling, 44, 97–103.
• Kim, H., Oh, K. Y., & Jeong, C. W. (2005). Panel Cointegration Results on International Capital Mobility in Asian Economies. Journal of International Money and Finance, 24(1), 71-82.
• Kuznets, S. (1955). Economic Growth and Income Inequality. The American Economic Review, 45(1), 1–28.
• Lee, C. C., & Lee, J. De. (2009). Income and CO2 Emissions: Evidence from Panel Unit Root and Cointegration Tests. Energy Policy, 37(2), 413–423.
• Munasinghe, M. (1999). Is environmental degradation an inevitable consequence of economic growth: tunneling through the environmental Kuznets curve. Ecological economics, 29(1), 89-109.
• Opschoor, J.B., 1990. Ecologische duurzame economische ontwikkeling: Een theoretisch idee en een weerbarstige praktijk. In: Nijkamp, P., Verbruggen, H., (Eds.), Het Nederlands Milieu in de Europese Ruimte: Preadviezen van de Koninklijke Vereniging voor Staathuishoudkunde. Stenfert Kroese, Leiden, 77–126.
• Osabuohien, E. S., Efobi, U. R., & Gitau, C. M. W. (2014). Beyond the Environmental Kuznets Curve in Africa: Evidence from Panel Cointegration. Journal of Environmental Policy and Planning, 16(4), 517–538.
• Perman, R., & Stern, D. I. (2003). Evidence from Panel Unit Root and Cointegration Tests that the Environmenta...: EBSCOhost. Australian Journal of Agricultural and Resource Economics, 47(3), 325–347.
• Pedroni, P. (2001). Purchasing Power Parity Tests in Cointegrated Panels. Review of Economics and Statistics, 83(4), 727-731.
• Pesaran, M. H. (2007). A Simple Panel Unit Root Test in the Presence of Cross-Section Dependence. Journal of Applied Econometrics, 22, 265–312.
• Pesaran, M. H. (2015). Testing Weak Cross-sectional Dependence in Large Panels. Econometric Reviews, 34(6–10), 1089–1117.
• Pezzey, J., 1989. Economic Analysis of Sustainable Growth and Sustainable Development. Environment Department. Working Paper No: 15, The World Bank, 81.
• Roca, J. (2003). Do Individual Preferences Explain the Environmental Kuznets Curve? Ecological Economics, 45(1), 3–10.
• Shafik, N., & Bandyopadhyay, S. (1992). Economic Growth and Environmental Quality: Time-Series and Cross-country Evidence (Vol. 904). World Bank Publications.
• Shuai, C., Chen, X., Shen, L., Jiao, L., Wu, Y., & Tan, Y. (2017). The Turning Points of Carbon Kuznets Curve: Evidences from Panel and Time-series Data of 164 Countries. Journal of Cleaner Production, 162, 1031–1047.
• Stern, D. I. (2004). The Rise and Fall of the Environmental Kuznets Curve. World Development, 32(8), 1419–1439.
• Swamy, P. A. (1971). Statistical Inference in Random Coefficient Regression Models. (Vol. 55). Springer Science & Business Media.
• Yerdelen Tatoğlu, F., & İçen, H. (2019). Çevresel Kuznets Eğrisinin Çok Boyutlu Panel Veri Modelleri ile Analizi. Anadolu İktisat ve İşletme Dergisi, 3(1), 26–38.
• Zoundi, Z. (2017). CO2 emissions, Renewable Energy and the Environmental Kuznets Curve, A Panel Cointegration Approach. Renewable and Sustainable Energy Reviews, 72(July 2016), 1067–1075.