Environmental Quality, Income Inequality and Economic Growth: Empirical Evidence from Five SAARC Countries
Keywords:Environmental Quality, Income Inequality, Economic Growth, SAARC Countries
The inverted-U trajectory between economic growth and environmental quality indicators has been hypothesized by the researchers which were later named as Environmental Kuznets Curve (EKC). The current research looks into the link between environmental quality and economic growth by incorporating income inequality as an additional channel by using data from 1991 to 2016 for panel of five SAARC countries. The study has employed fixed effect model for analysis and found that EKC has been verified for entire panel and income inequality affects environmental quality positively. The correlation between FDI andCO2 emission is positive and significant for the entire panel but the effect is very small. The education and carbon dioxide emission are negatively correlated and coefficient of education is 0.003 and statistically significant showing that increase in education level leads to reductions in CO2 emission.Population density impacts CO2 emission positively and significantly. This positive relationship implies that increase in population increases CO2 emission for the entire panel. Furthermore, the results indicate that mean emission of carbon dioxide in Pakistan is 0.01 which poses significant danger for Pakistan. The mean CO2 emission in India is 0.53 which is significant showing that mean emission in India is rising and relatively higher than Pakistan. Mean emission of CO2 is -0.10, -0.04 and -0.21 for Sri Lanka, Nepal and Bangladesh respectively which implies that mean emission in these countries is reducing.
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