Environmental degradation versus human development: joint dynamics or trade-off A causality analysis from developing countries

Abstract

The paper empirically examines the causal relationship between human development and air pollutants incorporating with energy consumption and electricity consumption within the panel vector of autoregression with a strongly balanced panel data set for 59 countries covering the annual period 1990-2012. The findings validate that there is a negatively causal relationship between human development and three types of pollutants, implying that increasing human development results in lower emissions in developing countries. However, all air pollutants do not cause human development. Additionally, while results reveal that improving human development leads to increased carbon emissions, nitrous oxide emissions and greenhouse gas emissions in Asia, it has a negative causal effect on nitrous emissions and greenhouse gas emissions in Latin America and the Caribbean and Africa. The incorporation of energy consumption and electricity consumption suggests that they are not preconditioned to improve human development but they might cause higher carbon emissions. This paper also explores causal relationships among the variables based on panel Granger causality models. Besides, the policy implications from these results are suggested.