Environmental Pollution Index and economic growth: evidence from OECD countries

Abstract

The increase in economic growth and production has caused some environmental risks. Factors such as global climate changes and global warming have raised awareness against environmental pollution. In this context, the environmental Kuznets curve (EKC) hypothesis, developed to explain the relationship between economic growth and environmental pollution, has become one of the most researched topics in the literature. In this research, the relationship is investigated between economic growth and environmental pollution for 28 OECD countries with data from the period 1995–2015. Initially, the Environmental Pollution Index was calculated using some standardized values. In addition, the relationship is examined between the Environmental Pollution Index, per capita income, environmentally related tax revenues, and urban population using Driscoll-Kraay standard errors and system generalized moments method estimators. According to the study’s findings, there is an inverted U–shaped relationship between the Environmental Pollution Index and per capita income. This result supports the environmental Kuznets curve hypothesis for the OECD countries. This research is aimed to contribute to improving awareness of environmental pollution risk, which has a vital impact on sustainability besides contributing to literature.