Abstract
The Environmental Kuznets Curve (EKC) hypothesis asserts that pollution levels rises as a country develops, but reaches a certain threshold where pollution begins to fall with increasing income. In EKC analysis, the relationship between environmental degradation and income is usually expressed as a quadratic function with turning point occurring at a maximum pollution level. This study seeks to examine the pattern and nature of EKC in Africa and major income groups according to World Bank classification comprising low income, lower middle income and upper middle income in Africa. In ensuring the robustness of our study; the paper proceeded by ascertaining the nature of EKC in all fifty-three countries of Africa in order to confirm the results obtained from basic and augmented EKC model. The study could not validate EKC hypothesis in Africa (combined), low income and upper middle income but empirical and analytical evidences supports the existence of EKC in lower middle income countries. Likewise, evidences from the robustness checks confirmed the findings from the basic and augmented EKC model. The study could not attain a reasonable turning point as there are evidences that Africa could be turning on the EKC at lower levels of income. Also, there is need to strengthen institutions in order to enforce policies that prohibits environmental pollution and ensure pro-poor development agenda.
Highlights
The concept of Environmental Kuznets Curve (EKC) originated from Kuznets (1955) who hypothesized that income inequality first rises and falls as economic development proceeds but the concept emerged via the path breaking study of Grossman and Krueger on the potential environmental impacts of NAFTA in 1991
In order to establish the stability of EKC model, we introduce other variables relevant in explaining the extent of environmental degradation
The study examines the pattern and nature of EKC in Africa and major income groups according to the World Bank income classification comprising low income, lower middle income and upper middle income in Africa
Summary
The concept of EKC originated from Kuznets (1955) who hypothesized that income inequality first rises and falls as economic development proceeds but the concept emerged via the path breaking study of Grossman and Krueger on the potential environmental impacts of NAFTA in 1991. According to Lomborg (2001) who draws on the World Bank’s World Development Report (1992) which contained one of the first environmental Kuznets curve (EKC) studies, later published by Shafik (1994); the EKC refers to an empirical finding which indicates an inverted U-Shaped relationship between local air pollution and per capita income. Perman and Stern (2003) argued that there is a doubt on the general applicability of EKC because even when cointegration relationship was established between variables in the region, many of the relationships for individual countries were not concave This re-examination of EKC model in Africa controls for cross country income heterogeneity by grouping Africa economies based on World Bank classifications of low income, lower middle income and upper middle income and investigated the nature of EKC in each income group .
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