Relationship Between Economic Development and Environmental Degradation.

By Quinn Lipetz

Faculty Mentor: Professor Amrita Dhar

The Environmental Kuznets Curve (EKC) is an economic model that describes the relationship between economic development and environmental degradation. This study aimed to determine if the pattern theorized by the EKC is visible in data from 32 countries from 1990 to 2015. The EKC states that as economic development increases within a country, there will be an increase in environmental degradation, but eventually a turning point will be reached, after which point environmental degradation will decrease as economic development continues to increase. This study used carbon dioxide emissions per capita as the measure of environmental degradation (dependent variable) and GDP per capita and the Human Development Index (HDI) as the measures of economic development (explanatory variables). The statistical analysis consisted of two fixed effects regressions; in the first carbon dioxide emissions per capita were regressed on GDP per capita, and in the second carbon dioxide emissions per capita were regressed on HDI. The result of both regression were significant and supported the EKC hypothesis; however, both regressions produced low R-squared values, which indicates that much of the variation in carbon dioxide emissions per capita was unaccounted for. In the future, a larger sample size and more explanatory variables should be included to provide a cleared picture of the relationship between environmental degradation and economic development.