In contemplating the prospects of advanced world countries, researchers stand divided among two groups: one group crying "melting of glaciers" and the group denying global warming as a significant concern while reaping the fruits of growth. One persistent concern for the other group is much desirable economic growth at the cost of environmental degradation, which is now reaching a scale where the global climate is become not only unsustainable but also causing a significant threat to our existence. In our opinion, environmental degradation should be taken very seriously now, particularly by pointing out the necessary variables causing it so that effective policy designs are formulated. The present study also gives a brief overview of the environmental repercussions with references to technology-led growth in developed countries. We have incorporated the direct composition effect captured by the capital-labor ratio (K/L), indicating that advanced countries use environmentally friendly technology for production processes. We propose that the most vulnerable impact of economic activities on environmental degradation (measured through carbon dioxide emissions) are urbanization, trade, and energy use. The latter is probably more policy-oriented, is undoubtedly more easily measured, and could be deeply analyzed for policy formulation. Whereas, in the urban areas, emissions of carbon dioxide particulate with an increase in population and development and serve as a significant concern for global environmental sustainability.
Keywords: Composition effect; Developed countries; Environmental Kuznets curve; Environmental degradation; Financial development.
© 2023. The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature.