Environmental Kuznets Curve in D8 Countries: Evidence from Panel Cointegration

Abstract

The environmental Kuznets curve (EKC) hypothesis has become an important factor in environmental studies in recent years. D8 members have viable economic positions in their respective regions due to their natural resources, crowded populations and potential markets sizes. This study deals with the validity of the EKC hypothesis for D8 countries between the years 1972 and 2014. The main contribution of this study to the literature is to identify the relationship between carbon emissions, GDP and energy use variables in D8 countries. Thanks to the model used, the relationship in the inverse N and N form was estimated and turning points were calculated. Furthermore, this relationship supports the N-shape environmental Kuznets curve hypothesis. In the light of these results, policymakers should immediately put policies in place that aim at reducing carbon emissions. The panel results of our study show that there is an inverse N-shaped relationship. The country with the highest per capita energy use and the highest carbon emission is Turkey, followed by Indonesia. In Malaysia, however , increase in per capita GDP causes a decrease in the carbon emission of per capita energy use. Therefore, Turkey and Indonesia’s clean energy use needs to take steps towards encouraging production which implements the policy.