Testing for the existence of the Environmental Kuznets Curve (EKC) in developed, developing and least developed countries: evidence from the Granger Causality Test

Details

Supervisors

Hasse, Jean-Baptiste

Faculty

Louvain School of Management

Degree label

Master [120] : ingénieur de gestion, à finalité spécialisée

Abstract

The aim of this paper is to assess the validity of the Environmental Kuznets Curve (EKC) in developed, developing and least developed countries (LDC) over a selected period, 1960-2021. The EKC suggests that environmental degradation grows with economic development, but that this increase has a limit and that once reached, it will start to decrease. This trend has been seen in many developed or industrialized countries however it is less certain in developing and least developed countries. Using a VAR model and the Granger Causality test, the result of this study demonstrates how complex and uncertain the relationship between CO2 emissions per capita and GDP per capita is. Considering the six countries selected, although the EKC holds for developed countries, the study demonstrates a linear relationship between the variables CO2 emissions per capita and GDP per capita in developing and least developed countries. Nevertheless, the results of the Granger Causality test show that neither variable causes the other, except in the case of the USA.