Growth - Environment Nexus: Testing the Validity of the Environmental Kuznets Curve for the South Asian Economies

In this study, the Environmental Kuznets curve (EKC) hypothesis validity has been tested for the five South Asian Countries (SACs). The EKC hypothesis assumes an inverted-U-shaped association between environmental pollutants and per capita income (PCI). The study uses CO2 emissions, in addition to other measures, as proxy for environmental degradation and PCI, energy consumption, population density and afforestation as control variables. A positive significant coefficient for PCI and a negative PCI square validate the EKC hypothesis in the SACs. The estimated turning point for the South Asian Economies was found to be US$ 921.1 per capita. The study concludes that environmental policies should focus on sustainable planning and management of resources. Investment in human capital, encouraging foreign direct investment (FDI) and trade friendly policies can play an important role in keeping environment cleaner while promoting economic growth in these economies.