Impact of Population, Trade and Economic Development on Environmental Degradation: A Cross Country Analysis

Abstract

This empirical study tries to investigate the presence of the Environmental Kuznets curve (EKC) for carbon dioxide (CO₂) emissions, Mt per capita and its causal relationships with economic development, trade openness and population by using time series data from Pakistan, India and Japan for the period of 1972 to 2014. The environmental consequences of trade and economic development don’t show uniform results across the multiple development stages. Depending on the national characteristics, the estimated EKC show different temporal patterns. ADF test is used for Unit root to check order of integration, VAR model is applied for long run relationship and simple Non-linear regression is applied for EKC determination. Non-linear regression results in three different models have shown some significance and some insignificance results. In case of Pakistan the Trade openness is not significantly affecting the CO₂ however population growth and per capita income is significantly contributing to environmental degradations. In Indian the population and per capita GDP are significant but same as Pakistan trade is insignificant with respect to effecting the CO₂ (environment). VAR model provided that Trade Openness is significant in the long run in Pakistan and Japan. Technically study is still open for the further researchers to trace more factors that can affect environmental degradation in different stages of development.