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What does the EKC theory leave behind? A state-of-the-art review and assessment of export diversification-augmented models

Ben Jebli, Mehdi, Madaleno, Mara, Schneider, Nicolas and Shahzad, Umer (2022) What does the EKC theory leave behind? A state-of-the-art review and assessment of export diversification-augmented models. Environmental Monitoring and Assessment, 194 (6). ISSN 0167-6369

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Identification Number: 10.1007/s10661-022-10037-4

Abstract

Over the past three decades, researchers have extensively examined the environmental Kuznets curve (EKC) hypothesis. Despite their early focus on the ecological impacts of anthropogenic development, associated conclusions differ and often conflict. In this study, we conducted a state-of-the-art review of this topic and shed light on the methodological challenges that the literature attempted to overcome so far. Since China is going through structural economic changes and environmental reforms, we relied on this illustrative case and developed an augmented-EKC framework to investigate whether this hypothesis holds between export product diversification and environmental pollution, stratifying by carbon energy content: renewable (Model 1) and fossil energy (Model 2). Quarterly data are collected over the most available and recent period (i.e., 1990Q1-2018Q4) and computed by applying the Quadratic Match-Sum Method (QMS) on annual series. Besides, per capita income and foreign direct investments are included as additional factors to the baseline models specifications. The empirical analysis comprises the Clemente–Montanes–Reyes unit root test with structural break and additive outlier, the autoregressive distributed lag (ARDL) bounds test for cointegration, the Granger causality test, and dynamic (DOLS) and fully modified OLS (FMOLS) estimators, followed by robustness checks confirming the stability of the coefficients exhibited in the two autoregressive settings. For both models, empirical results failed to support the existence of an inverted-U-shaped relationship among export product diversification and carbon release from fuel combustion in China. Also, as income grows, low-carbon resources seem improving export diversification and vice versa. Related findings are thought to bring robust inferences able to complement the existing literature and open a fruitful research direction.

Item Type: Article
Official URL: https://link.springer.com/journal/10661
Additional Information: © 2022 The Authors, under exclusive licence to Springer Nature Switzerland AG.
Divisions: Geography & Environment
Subjects: G Geography. Anthropology. Recreation > GE Environmental Sciences
J Political Science > JQ Political institutions Asia
JEL classification: F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q55 - Technological Innovation
C - Mathematical and Quantitative Methods > C3 - Econometric Methods: Multiple; Simultaneous Equation Models; Multiple Variables; Endogenous Regressors > C32 - Time-Series Models
Date Deposited: 19 May 2022 11:18
Last Modified: 26 May 2022 09:36
URI: http://eprints.lse.ac.uk/id/eprint/115153

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