Beyond Environmental Kuznets Curve: Structural Transformation and Emissions Decoupling in Advanced Economies
While the Environmental Kuznets Curve (EKC) hypothesis has been widely tested across different regions (OECD, South Asia, Africa, East Asia, etc.), much of the literature focuses either on developing countries or global panel datasets. Studies on advanced economies, particularly the EU, often assume that decoupling between growth and emissions occurs naturally once income reaches a threshold. However, recent findings are mixed, with some evidence pointing toward N-shaped or alternative curves.
Hence, this study examines the validity of the Environmental Kuznets Curve (EKC) hypothesis in the 27 member states of the European Union between 1995 and 2022. Using panel econometric methods, we analyse the relationship between GDP per capita and CO₂ emissions. The results provide no evidence of the inverted U-shaped relationship predicted by the EKC. Instead, economic growth driven by the increasing importance of the services sector appears to coincide with declining emissions. These findings suggest that the EKC framework does not adequately explain environmental dynamics in the EU and that structural transformation, rather than income level alone, is key to reducing emissions.
Copyright© 2025 The Author(s). This article is distributed under the terms of the license CC-BY 4.0., which permits any further distribution in any medium, provided the original work is properly cited.
Article’s history: Received 19th of October, 2025; Revised 6th of November, 2025; Accepted 2nd of December, 2025; Available online: 30th of December, 2025. Published as article in the Volume XX, Winter, Issue 4(90), December, 2025.
Misztal, P. (2025). Beyond Environmental Kuznets Curve: Structural Transformation and Emissions Decoupling in Advanced Economies. Journal of Applied Economic Sciences, Volume XX, Winter, 4(90), 775 – 788. https://doi.org/10.57017/jaes.v20.4(90).09
Acknowledgments/Funding: No external funding was received for this research. The study was conducted without financial support from public, commercial, or not-for-profit organisations.
Conflict of Interest Statement: The author declares that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.
Data Availability Statement: All data used in this study are derived from publicly accessible sources. Macroeconomic and environmental indicators, including GDP per capita and CO₂ emissions, were obtained from the Eurostat database. All datasets can be accessed freely and replicated by other researchers.
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