Environmental Degradation and Economic Growth: A Longitudinal Analysis Across Different Income Group Countries

Abstract

This study attempts to analyse the relation of ecological footprint (EF) and air pollutants—CO2, N2O, SO2 and CH4—with economic growth, urbanisation, foreign direct investment and energy consumption through environmental Kuznets curve (EKC) framework by employing fixed/random effect model. It involves a panel of 55 selected countries from several income groups—high, middle and low—covering the period 1990–2018. A theoretical approach has been developed to analyse the pollution intensity of population, based on decomposition analysis coherent with application of the notion of Kaya identity. The results confirmed the existence of inverted U-shaped relationship for EF and SO2 in all types of countries. The pollutants—CO2, N2O and CH4—exhibit inverse U-shaped EKC in middle- and low-income countries. Only for high-income countries, N2O model detects the existence of U-shaped curve. The study suggests that reconsideration of some economic and environmental policies is necessary to mitigate environmental degradation issues. JEL Codes: Q54, O4, O21, Q43, Q56