Testing validity of the EKC hypothesis in South Korea: role of renewable energy and trade openness

Abstract

This paper investigates the dynamic short-term and long-term relationships among per capita GDP, per capita energy consumption, per capita renewable energy consumption, trade openness, and per capita carbon dioxide (CO₂) emissions within the framework of the environmental Kuznets curve (EKC) hypothesis for Korea from 1971 to 2017. According to the empirical findings of the autoregressive distributed lag (ARDL) bounds testing procedure, although increases in per capita GDP and per capita energy consumption increase per capita CO₂ emissions, per capita renewable energy consumption and trade openness decrease per capita CO₂ emissions. Furthermore, according to the empirical results, an N-shaped relationship has been identified between per capita CO₂ emissions and per capita GDP. This indicates that our empirical findings do not support the EKC hypothesis in Korea. Thus, economic growth alone is not sufficient to address environmental pollution; in response, active environmentally friendly policies should be implemented, and the energy matrix should be transformed in favor of renewable energy in Korea.

Keywords: ARDL bounds testing; CO2 emissions; Economic growth; International public goods; Korea; Renewable energy.