Investigating the impact of economic growth on environment degradation in developing economies through STIRPAT model approach

Abstract

This study aims to investigate the economic factors underlying the current scenario of environmental deterioration, and the role of innovations in achieving sustainable development. For this reason, this study has applied the Environmetnal Kuznets Curve (EKC) and Stochastic Effects by Population, Affluence, and Technology (STIRPAT) structure together using the panel data regression from Asian economies between 1990 and 2019. This study employs panel Auto-Regressive Distributed Lag (ARDL) and Pooled Mean Group (PMG) approaches of dynamic panel data. The funding suggests that the inverted U-shaped relationship for the economic growth per capita and environmental degradation is not supported. However, this study finds that innovations can facilitate the achievement of EKC at lower levels of growth. This study contributes to the methodological understanding of investigating the inverted U-shaped relationship and explains the functioning of the EKC model. The empirical evidence presented in the study challenges the existence of EKC and proposes innovation as a viable approach for Asian economies to achieve sustainable development.