Ekc Essay

2.1.1 Definition of EKC:

In “World Development Report 1992” , the definition of EKC is given by “the view more economic activities mean more environmental pollution based on the assumption that technology, preference and environmental investments are constant, but people will pay more attention to environment issues and resolve it with increasing income, consequently, environmental pollution level will decrease”.

2.1.2 Reasons of U-Shaped EKC:

There are four plausible reasons behind U-shaped EKC as explained in World Development Report 1992 which are as follows:

1. Income elasticity of environment demand: People pay more attention to life quality with increasing income, wish to enjoy better environmental welfare, and be willing to consume healthy products. As a result, the government will make stricter rule of environmental protection, which improve environment level eventually. Many researches (W. Beckerman 1992), (R.Carson 1997), (K. McConnell 1997) on EKC emphasized the role of income elasticity of environment demand, as a key decreasing factor of environmental

o Structural changes: Economic development brings various structural changes such as infrastructural improvement, constructions etc. which influence environment.

o Technological changes: With increasing income and technological advancement, the old and pollution-intensive techniques will be replaced by new and clean techniques, and this will help in improving environmental quality.

3. International trade: International trade is an important factor of EKC. The influences of free trade to environment give dual aspects: one is environmental improvement via technical effect and the other one is aggravation of environmental pollution with the expansion of economic