Economic growth implications for environmental quality indicators: a review and empirical analyses using a dynamic endogenous environmental Kuznets curve

Abstract

Using a worldwide sample, this thesis examines the correlation between changes in environmental conditions and global economic growth, incorporating the growth rate of some control variables (population, financial development, merchandise trade, and regulations). One possible relationship is defined in the literature as the environmental Kuznets curve or EKC hypothesis. This hypothesis postulates an inverted-U association between some pollutants and economic output (Grossman & Krueger, 1991; Shafik, 1994).To identify possible gaps in the hypothesis, this thesis uses a bibliographic mapping methodology to carry out a systematic literature review. It uses the Social Sciences Citation Index, an online academic citation database within the Thomson Reuters Web of Science™ platform from 1900 to 2017, and HistCite™ software to map the literature. From that, four research streams were identified: testing the basic EKC equation, critique of EKC, determinants of EKC, and review of EKC. An examination of more recent EKC literature (2005-2017) was also completed. The results suggest two new research streams, environmental indicators not previously considered and a new nexus of income and energy consumption. Also, fresh critiques of EKC and other factors affecting the EKC relationship were found in the more recent literature.The second essay of this thesis analyses the impacts of global economic growth on the climate change phenomenon under a dynamic EKC context. I use changes in global CO2 concentrations as a proxy for climate change in longitudinal panels of data from 177 countries from 1973 to 2013. I provide empirical evidence that global economic growth shows an inverted U-shape in relation to changes in CO2 concentration using the ordinary least square (OLS) and fixed-effect panel conventional methods as well as the dynamic system generalized method of moments (GMM) methodology. The results were obtained by utilising the global environmental measure of CO2 concentrations, a more representative indicator for analysing the EKC relationship.Finally, the third essay seeks to empirically analyse the relationship between global economic growth and planetary boundary measurements. These planetary boundaries include global CO2 concentration as a climate change proxy, threatened species as a biodiversity loss proxy, the total ozone as ozone depletion proxy, the mean of the surface ocean hydrogen ion concentration as ocean acidification proxy, and the global fertiliser consumption as biochemical cycles proxy. Under this integrated perspective, the EKC hypothesis is supported for climate change and ocean acidification panels using a dynamic system GMM approach. Meanwhile, biochemical cycles, ozone depletion and freshwater use, land change, and biodiversity loss boundaries do not support the existence of the EKC shape using the same methodology.