A Critical Reading of Environmental Kuznets Curve: CO2 Emissions in a Developing Country

Abstract

Environmental Kuznets Curve (EKC) proposes a non-monotonic relationship between the environment and economic level. It also tries to define another important reduced relationship along with economic development. Therefore it has become an attraction for empirical studies giving reference for almost all the areas of the subject of the relationship between economy and environment. An important empirical area of the hypothesis is between CO2 emission which is a global emission and GDP per capita being the representative of economic development. The present and near future situations of the environmental pressure are evaluated by taking the CO2 emission as a representative of environmental pressure. Being directly connected to energy, CO2 emissions are generally evaluated differently than other emissions. Our study critically analyzes main confusions in the literature in terms of the interpretation of the EKC applications on developing countries using primarily example of estimates for Turkey‟s CO2 emissions. As for reduced form EKC time series analyses for Turkey, there are a few statistically robust analyses; and a main diversion cause from minor econometric analysis try to be clarified here. As to the physical emission values, it is not difficult to predict a short term rise for the carbon dioxide emission level. Particularly, Turkey, as a developing country with lower values is very likely to show further environmental pressure increase in terms of carbon dioxide emission in the short-term. On the other hand, we analyze the main point need to be cleared for a developing country EKC is evaluation of longrun attractor, referring to the cointegration concept Engle and Granger (1991) introduced, which hints the shape of long run relationship. Therefore, we attempt to unite the mathematics of the theory, use analytic investigation and the inferences of the econometric estimations to respond to critiques raised.