A comparative analysis of environmental quality and Kuznets curve between two newly industrialized economies

Abstract

PurposeDue to large amounts of coal burning, huge carbon dioxide emission and poor environmental quality, it is important to identify whether environmental Kuznets curve exists in China and India since in downward period of environmental Kuznets curve, economic growth in these countries will largely contribute to world environmental quality. Further, it helps to make a comparative analysis between China and India on how economic growth will contribute to the environmental quality in both upward and downward period of environmental Kuznets curve due to energy consumption.Design/methodology/approachThis study uses the data of carbon dioxide emission, per capita GDP and energy consumption from 1972 to 2017 to identify individual and panel-level environmental Kuznets curve of China and India. Before going to regression and causality analysis, unit root and cointegration tests are performed.FindingsThis study finds the existence of environmental Kuznets curve in China and India at both individual and panel level. Further, due to high energy consumption, environmental quality in China will deteriorate at a lower rate in the long run than that of India. Next, the increase in economic growth or per capita GDP in the long run will deteriorate environmental quality at a lower rate in China than that of India. Besides, with the zero level of energy consumption and per capita GDP, the environmental quality of China will be worse than that of India. However, increase in per capita GDP after threshold level will improve environmental quality in India at a higher rate than that of China.Research limitations/implicationsIt helps to formalize the comparative relationship between the two large Asian economies by knowing the influence of economic growth on environmental degradation due to energy consumption. However, this study cannot conclude exactly when China and India can avail the downturn in environmental Kuznets curve.Originality/valueIt firstly establishes a link among energy consumption, economic growth and environmental quality between China and India including comparative pace in both upward and downward period of environmental Kuznets curve.