Abstract
The unavoidable negative effects of global warming have been a key if not the most important issue occupying policy makers in the world at large today. The much talked about green economy nowadays seeks to achieve sustainable economic growth and development without compromising environmental quality. The relationship between environmental degradation and economic growth is largely explained by the environmental Kuznets curve (EKC) hypothesis. By employing the basic postulation of the baseline EKC framework, this study proposes and tests the existence of a dualistic approach of the EKC hypothesis. Geometry is used to illustrate the proposed dualistic model. Meanwhile, the novel dynamic common correlation effect econometric technique is employed to test the existence of the dualistic EKC within a panel of 109 countries from 1995 to 2016. The outcome from the estimated models shows that, in the global sample, the existence of the dualistic U-shaped and N-shaped EKC hypothesis is validated. When the sample is split into subsamples based on income levels, the U-shaped EKC hypothesis is validated for lower-income and high-income economies meanwhile, the N-shaped dualistic EKC is mostly associated with high-income economies.
Highlights
In a bid to combat climate change, enhance economic prosperity, and attain the set goals of the 21st Conference of the parties (COP21 hereafter), it is very important to comprehend the effects of variations in economic growth on the environment (Allard et al 2018a)
Equation 4 presents the primal of the N-shaped environmental Kuznets curve (EKC) hypothesis Eq (5) gives the dual hypothesis we propose from the primal hypothesis
This indicates that as policy makers implement environmentally friendly policies within a nation due to the negative effects of past degradation, when environmental improvement is attained up to a certain level, economic agents tend to lose focus on combating pollution and as such pollution starts increasing again. We further present another version of the N shape in case 4 wherein EF increases as ecological overshoot (EOS) falls, attains a certain point of inflexion, after which it continues to increase while EOS continues to fall
Summary
In a bid to combat climate change, enhance economic prosperity, and attain the set goals of the 21st Conference of the parties (COP21 hereafter), it is very important to comprehend the effects of variations in economic growth on the environment (Allard et al 2018a). Reconciling the desire of nations to achieve economic growth without degrading the environment has become one of the major issues economists and policy makers around the globe are faced with today This has promoted the debate on whether economic growth which is important for prosperity and wellbeing of the economy and its citizens in both advanced countries and developing economies will increase ecological problems and harm Mother Nature or the environment. McDonald and Patterson (2004) noted that the use of ecological footprint helps to emphasize the direct and indirect impacts of consumption and production activities on the environment The investigation of this relationship has been done using diverse empirical approaches.
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