Economic Growth and The Quality of Environment: Evidence of The Environmental Kuznets Curve (EKC) in Indonesia

Idris Idris, Yollit Permata Sari


This study proved the EKC hypothesis results of the trade-off between economic growth and environmental degradation in Indonesia. The researchers used the non-linear quadratic regression estimation. This study found that the EKC hypothesis was almost valid in all islands in Indonesia, such as Sumatra Island, Sulawesi Island, Borneo Island, and Small Island in the Eastern Region of Indonesia. Thus, the economic growth causes the environmental gradation while the trade-off did not apply in Java and Bali. Government policies regarding the environment and globalization played an important role in generating and transferring production technology that saved resources and used cleaner technology from developed countries to developing countries so the EKC hypothesis does not apply in Indonesia.

Full Text:



Al-Mulali, U., Weng-Wai, C., Sheau-Ting, L., & Mohammed, A. H. (2015). Investigating the environmental Kuznets curve (EKC) hypothesis by utilizing the ecological footprint as an indicator of environmental degradation. Ecological Indicators, 48, 315–323.

Apergis, N., Payne, J. E., Menyah, K., & Wolde-Rufael, Y. (2010). On the causal dynamics between emissions, nuclear energy, renewable energy, and economic growth. Ecological Economics, 69(11), 2255–2260.

Arouri, M. E. H., Ben Youssef, A., M'henni, H., & Rault, C. (2012). Energy consumption, economic growth, and CO 2 emissions in the Middle East and North African countries. Energy Policy, 45, 342–349.

Aye, G. C., & Edoja, P. E. (2017). Effect of economic growth on CO2 emission in developing countries: Evidence from a dynamic panel threshold model. Cogent Economics and Finance, 5(1), 1–22.

Beckerman, W. (1992). Economic growth and the environment: Whose growth? whose environment? World Development, 20(4), 481–496.

Cassim, R., Jackson, W., Gavera, L., & Robertson, P. (2004). International Trade in Services and Sustainable Development : The Case of Tourism in South Africa Contributing authors : About the Trade Knowledge Network. April.

Chandran, V. G. R., & Tang, C. F. (2013). The impacts of transport energy consumption, foreign direct investment, and income on CO2 emissions in ASEAN-5 economies. Renewable and Sustainable Energy Reviews, 24, 445–453.

Charfeddine, L., Yousef Al-Malk, A., & Al Korbi, K. (2018). Is it possible to improve environmental quality without reducing economic growth: Evidence from the Qatar economy. Renewable and Sustainable Energy Reviews, 82(September 2017), 25–39.

Dinda, S. (2004). Environmental Kuznets Curve hypothesis: A survey. Ecological Economics, 49(4), 431–455.

Dogan, E., & Turkekul, B. (2016). CO2 emissions, real output, energy consumption, trade, urbanization, and financial development: testing the EKC hypothesis for the USA. Environmental Science and Pollution Research, 23(2), 1203–1213.

Farhadi, M. (2015). Transport infrastructure and long-run economic growth in OECD countries. Transportation Research Part A: Policy and Practice, 74, 73–90.

Grossman, G., & Krueger, A. (1991). Environmental Impacts of a North American Free Trade Agreement. National Bureau of Economic Research, 3914.

Gujarati. (2009). Basic econometric. Fifth Edition. McGraw-Hill.

Hossain, S. (2012). An Econometric Analysis for CO<sub>2</sub> Emissions, Energy Consumption, Economic Growth, Foreign Trade and Urbanization of Japan. Low Carbon Economy, 03(03), 92–105.

Jahangir Alam, M., Ara Begum, I., Buysse, J., & Van Huylenbroeck, G. (2012). Energy consumption, carbon emissions and economic growth nexus in Bangladesh: Cointegration and dynamic causality analysis. Energy Policy, 45, 217–225.

Jha, R., & Murthy, K. V. B. (2003). An inverse global environmental Kuznets curve. Journal of Comparative Economics, 31(2), 352–368.

Jiang, W., & Chen, Y. (2020). Asymmetries in the nexus among energy consumption, air quality, and economic growth in China. Energy Reports, 6, 3141–3149.

Juariyah, L. (2015). HRM, SME's Innovation and Growth: Exploratory Study of Human Resource Management Practices in SME's Creative Industry in Malang City. International Conference on Human Resource Management (ICHRM), 487-503

Juariyah, L., & Saktian, R. 2018. Does Motivators Determine Employees' Job Satisfaction? Testing Herzberg Theory of Motivation in Indonesian Café' and Restaurant Context. The First International Conference on Economics and Business (IRCEB). KnE Social Sciences.

Khan, Z., Khan, Z., Ahmad, M., Rahman, Z., Hengyi, H., & Khan, S. (2018). Carbon emissions, energy use, gross domestic product and total population in China. Ekonomia i Środowisko, 2(2), 32–44.

Komen, M. H. C., Gerking, S., & Folmer, H. (1997). Income and environmental R&D: Empirical evidence from OECD countries. Environment and Development Economics, 2(4), 505–515.

Kurniawan, R., Sugiawan, Y., & Managi, S. (2021). Economic growth – environment nexus: An analysis based on a natural capital component of inclusive wealth. Ecological Indicators, 120(March 2018), 106982.

Liddle, B. (2015). What are the carbon emissions elasticities for income and population? Bridging STIRPAT and EKC via robust heterogeneous panel estimates. Global Environmental Change, 31(61304), 62–73.

Nasreen, S., Mbarek, M. Ben, & Atiq-ur-Rehman, M. (2020). The long-run causal relationship between economic growth, transport energy consumption and environmental quality in Asian countries: Evidence from heterogeneous panel methods. Energy, 192, 116628.

Ozturk, I., & Acaravci, A. (2010). CO2 emissions, energy consumption, and economic growth in Turkey. Renewable and Sustainable Energy Reviews, 14(9), 3220–3225.

Panayotou, T. (1994). Empirical tests and policy analysis of environmental degradation at different stages of economic development. In Pacific and Asian Journal of Energy (Vol. 4, Issue 1).

Saidi, K., & Hammami, S. (2015). The impact of CO2 emissions and economic growth on energy consumption in 58 countries. Energy Reports, 1, 62–70.

Sasana, H., & Aminata, J. (2019). Energy subsidy, energy consumption, economic growth, and carbon dioxide emission: Indonesian case studies. International Journal of Energy Economics and Policy, 9(2), 117–122.

Shahbaz, M., Khraief, N., & Jemaa, M. M. Ben. (2015). On the causal nexus of road transport CO2 emissions and macroeconomic variables in Tunisia: Evidence from combined cointegration tests. Renewable and Sustainable Energy Reviews, 51, 89–100.

Shahiduzzaman, M., & Alam, K. (2012). Cointegration and causal relationships between energy consumption and output: Assessing the evidence from Australia. Energy Economics, 34(6), 2182–2188.

Ssali, M. W., Du, J., Mensah, I., A., & Hongo, D. O. (2019). Investigating The Nexus among Environmental Pollution, Economic Growth, Energy Use, and Foreign Direct Investment in 6 selected sub-Saharan African Countries. Environmental Science and Pollution Research, 26: 11245-11260.

Steel, R. G. D. and J. H. T. (1980). Principles and Procedures of Statistics (2nd edition).

Walpole, R. . (1993). Pengantar Statistika Edisi ke-3. PT Gramedia Pustaka Utama.

Yang, L., Yuan, S., & Sun, L. (2006). The Relationships between Economic Growth and Environmental Pollution Based on Time Series Data: An Empirical Study of Zhejiang Province. Journal of Cambridge Studies, 411711151, 33–42.



  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Creative Commons License

Ekonomi Bisnis is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License