Is there an EKC between economic growth and air pollutant emissions in SAARC countries? Evidence from disaggregated...

The manufacturing and construction (M&C) sector not only plays a vital role in promoting economic growth, but is also a significant contributor to global air pollution. Growing concerns regarding air pollutant emissions necessitate a more disaggregated (i.e., sectoral) investigation in order to identify the major contributors. This study employs aggregated and disaggregated data to determine the fundamental effects of economic growth (i.e., overall growth and sectoral growth) on air pollutant emissions (APE) (specifically, PM2.5 and PM10 released by the M&C sector) in SAARC economies between 1995 and 2018. It assesses the environmental Kuznets curve (i.e., inverted U-shaped and N-shaped) using the feasible generalized least squares (FGLS), panel-corrected standard errors (PCSE), and generalized method of moments (GMM) techniques. The sectoral analysis reveals the presence of an N-shaped EKC while the overall analysis indicates an inverted U-shaped EKC. Population, financial development (FD), and merchandise exports (MX) have no influence on the estimates. Population and FD increase APE in all models, whereas the effects of MX vary between models. As SAARC economies are capital-deficient, these economies can adopt unbalanced environmental protection policies. First, focus on major contributing sectors (e.g., M&C sector) to curb APE, then focus on less emitting sectors in turn. By implementing pollution reduction strategies on M&C sector activities, governments may reach their threshold (peak) points earlier than expected. A reduction in APE is impossible without rigorous monitoring and application. Being capital-deficient nations and given the collective nature of the problem, a Transboundary Haze/Pollution agreement is required to solve this issue.