Impact Of Human Development And Economic Growth On Environmental Quality

Abstract

This study makes a valuable contribution to the existing literature by examining the impact of economic growth and human development on environmental quality using two different Environmental Kuznets Curve (EKC) specifications. The analysis focuses on 32 Mediterranean countries from 1990 to 2019 and considers two distinct subpanels: developed and developing countries. By employing advanced panel unit root and cointegration tests that account for cross-sectional dependence, the study finds that the relationship between per capita income and environmental degradation follows an inverted U-shaped pattern, supporting the traditional EKC hypothesis. Conversely, when examining the relationship between human development and environmental degradation using a modified EKC (MEKC) framework, a similar inverted U-shaped relationship is observed. These findings suggest that economic growth and human development contribute to improving environmental quality primarily in developed countries. Additionally, the study identifies that financial development and trade liberalization in developed countries play a role in environmental improvement.