Chapter 19: Environmental Policy and the Environmental Kuznets Curve: Can Developing Countries Escape the Detrimental Consequences of Economic Growth?
Matthew A. Cole and Eric Neumayer* Many have taken the policy implication of the so-called ‘environmental Kuznets curve’ (EKC) to be that poor countries can and perhaps should grow themselves out of environmental problems over time rather than tackling them with stricter regulation now. Many critics have argued, however, that the EKC suffers from severe methodological problems that cast doubt on the reliability of EKC results. In the face of such criticism, the aim of this chapter is to examine the implications of the EKC for pollution trends in less developed countries (LDCs). First, we consider the robustness of the EKC critique. Our review suggests that the EKC may be more robust than some studies have claimed. We then focus on one potentially more problematic criticism: the issue of whether compositional changes in developed countries (DCs) are responsible for emissions reductions and whether they at least partly result from the substitution of imports for pollution-intensive domestic production. If so, it is obviously doubtful whether today’s LDCs can also expect to experience such compositional changes. Our results do suggest that the compositional reductions in pollution experienced by DCs stem, at least in part, from DC demand for pollution intensive output being increasingly satisﬁed by imports.1 In other words, the now rich countries have become clean at least partly by exporting the dirty production of products to other, poorer countries. This implies that the current poor countries will not be able to replicate fully this experience. The second part of the...
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