Revisiting the Environmental Kuznets Curve Hypothesis in South Asian Countries: The Role of Energy Consumption and Trade Openness

Bartosz Jóźwik (), Phouphet Kyophilavong, Aruna Kumar Dash and Antonina Viktoria Gavryshkiv
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Bartosz Jóźwik: Department of International Economics, The John Paul II Catholic University of Lublin, 20-950 Lublin, Poland
Aruna Kumar Dash: Department of Economics, IBS Hyderabad, IFHE University, Dontanapally, Telangana, Hyderabad 501203, India
Antonina Viktoria Gavryshkiv: Department of International Economics, The John Paul II Catholic University of Lublin, 20-950 Lublin, Poland

Energies, 2022, vol. 15, issue 22, 1-20

Abstract: South Asian countries have seen remarkable economic growth and development in the past few decades. This has been driven by financial sector reforms, industrialization, and expansion of foreign trade. The present study is designed to identify the long- and short-run relationships among environmental degradation, economic growth, energy consumption, and trade openness in the South Asian region. Our research contributes to the literature by employing a new approach (the NARDL method). We examine annual data for four South Asian countries between 1971 and 2014. We found that there was a long-run equilibrium relationship between environmental degradation, economic growth, energy consumption, and trade openness. The results confirmed the inverted U-shaped EKC hypothesis only for India and Pakistan. However, the long-term coefficients related to energy consumption were statistically significant only in Pakistan. The most interesting finding was that only in Sri Lanka did the long-run coefficients associated with trade openness shocks significantly impact carbon dioxide emissions. These impacts were based on the scale effect. Our study has some policy implications. Foremost, the governments of South Asian countries should promote and subsidize green energy use by increasing R&D spending on renewable energy.

Keywords: environmental Kuznets curve; South Asian countries; trade openness; energy consumption; economic growth; carbon dioxide emissions; NARDL model; ARDL model (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2022
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