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Uddin, MSharif, TPillai, R (2021). Revisiting the EKC Hypothesis on the Moderating Role of Human Capital Formation in the Economic Growth-Environment Nexus. Applied Economics Quarterly, 67(1), 71-111. https://doi.org/10.3790/aeq.67.1.71
Uddin, Mirza Md Moyen Sharif, Taimur Pillai, RekhaUddin, Mirza Md Moyen Sharif, Taimur Pillai, RekhaUddin, Mirza Md Moyen Sharif, Taimur Pillai, Rekha (2021). "Revisiting the EKC Hypothesis on the Moderating Role of Human Capital Formation in the Economic Growth-Environment Nexus" Applied Economics Quarterly, vol. 67no. 1, 2021 pp. 71-111. https://doi.org/10.3790/aeq.67.1.71
Uddin, MSharif, TPillai, R (2021). Revisiting the EKC Hypothesis on the Moderating Role of Human Capital Formation in the Economic Growth-Environment Nexus. Applied Economics Quarterly, Vol. 67 (Issue 1), pp 71-111. https://doi.org/10.3790/aeq.67.1.71

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Revisiting the EKC Hypothesis on the Moderating Role of Human Capital Formation in the Economic Growth-Environment Nexus

Uddin, Mirza Md Moyen | Sharif, Taimur | Pillai, Rekha

Applied Economics Quarterly, Vol. 67 (2021), Iss. 1 : pp. 71–111

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Mirza Md Moyen Uddin, Corresponding author: UNE Business school, University of New England, Armidale 2351, NSW, Australia.

Taimur Sharif, Newman University, Birmingham, United Kingdom.

Rekha Pillai, British University in Dubai, United Arab Emirates.

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Abstract

This article investigates the moderation effect of human capital formation on the relationship between economic growth and selected significant indicators of environmental degradation. Panel data for 115 countries for the period 1990 – 2016 were collected from World Development Indicators (2018). The Human Development Index (HDI) is employed as a proxy for human capital formation in investigating the growth-environmental pollution nexus. The study employs structural equation modelling (SEM) hypothesis testing with multiple variables and complex causal relationships. Confirmatory factor analysis (CFA) is used to assess the reliability and validity analysis in the measurement model. Results reveal that HDI interaction with GDP degrades the quality of environment while its interaction effect with GDP2 mitigates varied selected emissions for upper-middle and high income countries, all of which show concurrence with the Environmental Kuznets Curve (EKC) hypothesis. Moreover, interaction effect of HDI reduces both CH4 and PM2.5 emissions in low income countries. Findings provide evidence of the Pollution Haven Hypothesis (PHH) that GDP and GDP2 growth emit a significant amount of CO2 in low- and lower-middle income countries, highlighting contradictory results with an HDI interaction. The results give rise to several policy implications, all of which point to a need for concerted efforts in implementing prudent economic development initiatives that mitigate environmental degradation. Also, the study pinpoints the need for a serious consideration of placing a global focus on the “education for sustainability” (EfS) principle in consumption and production activities and, accordingly, incorporating SD into national curricula to reap larger benefits of human capital formation in the growth-environment nexus.

Table of Contents

Section Title Page Action Price
Mirza Md Moyen Uddin / Taimur Sharif / Rekha Pillai: Revisiting the EKC Hypothesis on the Moderating Role of Human Capital Formation in the Economic Growth-Environment Nexus 1
Abstract 1
1. Introduction 2
2. Literature Review 4
3. Rationale and Hypothesis Development 7
3.1 Dependent Variable: Environmental Degradation 7
3.2 Explanatory Variables 7
3.2.1 Economic Growth 7
3.2.2 Energy Consumption 8
3.2.3 Urbanization 9
3.2.4 Manufacturing 9
3.2.5 Human Development Index (HDI) as a Moderating Factor 1
4. Data, Econometric Model, and Methodology 1
4.1 Data 1
4.2 Model Specification and Justification of the Variables 1
4.3 Econometric Methods 1
5. Empirical Results 1
5.1 Summary Statistics, Validity Analysis, and CFA 1
5.2 Long-Run Coefficients of Main Effect in Path Analysis 1
5.3 Long-Run Coefficients of Interaction Effect in Path Analysis 1
5.4 Two-Way Interactions 1
5.5 Standardized Total Effect 1
5.6 Hypothesis Testing 2
6. Conclusion, Limitations, and Policy Implications 2
Availability of Data and Materials 2
References 2
Appendix 3