An investigation of the environmental Kuznets curve in emerging economies

Abstract

Abstract Economies around the globe are experiencing a dilemma surrounding how to promote sustainable economic growth while also ensuring environmental health and emerging economies around the world are heavily contributing to environmental pollution due to their massive industrialization. This study investigates an inverted U-shaped relationship between national scale economic indicators and environmental pollutants. The research study employs annual data for a panel of 24 emerging economies around the world for the period 2000–2017. The study employed an improved panel GMM model, particularly the Arellano-Bover/Blundel-Bond (1995; 1998) technique, in order to ensure the results are more robust. The findings indicate that a positive change in real GDP per capita reduces carbon dioxide emissions and fossil fuel energy consumption, but will increase nitrous oxide. The square of real GDP will increase carbon dioxide emissions and fossil fuel energy consumption, while nitrous oxide emissions decreases. Industry value added results in an increase in carbon dioxide emissions, a reduction in fossil fuel energy consumption and an increase in nitrous oxide emissions. Domestic credit provided by financial institutions increases carbon dioxide emissions, reduces fossil fuel energy consumption and nitrous oxide emissions in a panel of countries. Renewable energy consumption reduces carbon dioxide emissions and fossil fuel energy consumption, and increases nitrous oxide emissions in the emerging economies. Policy recommendations have been suggested to reduce environmental pollutants while achieving sustainable economic growth and development for a panel of emerging economies around the globe.