The impasse of energy consumption coupling with pollution haven hypothesis and environmental Kuznets curve: a case study of South Asian economies

Abstract

This study investigates the role of energy consumption in environmental degradation and checks the validity of the environmental Kuznets curve (EKC) and pollution haven hypothesis (PHH) for the South Asian economies. The model is also controlled for population growth. The dynamic panel data model is estimated through Fully Modified Ordinary Least Square (FMOLS) rigorously. The results reject the possibility of the existence of EKC but ensure the prevalence of PHH. The study suggests that the South Asian countries should focus on attracting clean foreign investment, whereas the renewable energy production is critical for climate change mitigation. The study also stresses the financial institutions' active role in providing easy loans for promoting research and development in environmentally friendly production practices.

Keywords: Environmental degradation; FMOLS; Foreign direct investment; Non-renewable energy consumption.