Economic Growth and Environmental Sustainability: Empirical Evidence from East and South-East Asia

Abstract

This study investigates the relationship between economic growth and environmental sustainability in the East and South-East Asian countries focused on the environmental Kuznets curve hypothesis, using data from environmental performance index (EPI) in 2010. Both pollution and eco-efficiency measures, two components of environmental sustainability, are considered as dependent variables while GDP per capita is used as an independent variable. Besides independent variable, the study also considers population density and civil and political liberty index (CIVLIB) as control variables and East and South-East Asia as a dummy variable. By using ordinary least square (OLS) method, this study reveals that while the increase of the GDP per capita appears to have positive impact on the pollution measures, it is found mix (both positive and negative) results on eco-efficiency measures. These findings prove the hypothesis of environmental Kuznets curve partially but not entirely. We conclude the paper by suggesting that the policy makers should give priority to the eco-efficiency measures along with pollution measures in order to ensure environmental sustainability in the process of economic development.

Keywords: economic growth, environmental sustainability, East Asia, South-East Asia

JEL Classification: O1, O2, O5