Environmental Degradation and Economics Growth: Testing the Environmental Kuznets Curve Hypothesis (EKC) in Six ASEAN Countries

Abstract

Environmental issues have been widely reported in recent years. From climate change to plastic waste, environmental quality is deteriorating at an unprecedented speed in human history. Environmental degradation is believed to have tied to the different stages of a country's economic growth, as the Environmental Kuznets Curve (EKC) hypothesis suggested. Despite the proliferation of research about the EKC hypothesis, no consensus has been reached in the field regarding the validation of the hypothesis. This paper employs time-series methods to empirically investigates the impacts of economic growth, trade openness, energy consumption, and foreign direct investment on environmental degradation in six selected ASEAN countries, from the period between 1971 to 2013, to examine the validity of the EKC hypothesis. First, Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests were applied to test the stationarity of selected variables, Johansen Cointegration test and ARDL bound testing for cointegration test, ARDL models were constructed to find the potential long-and short-run relationships. The results showed the presence of EKC in Singapore, Thailand, and Vietnam, and no evidence of EKC was found in Malaysia, Philippines, and Indonesia.