Abstract

Most of the studies testing empirical validity of the Environmental Kuznets Curve (EKC) hypothesis—the idea that advocates deterioration of environmental quality at the initial stages of growth but an improvement of the same after a threshold level of income per capita—have focussed only on the production process of the economies. A valid EKC is exhibited even in the cases where the pollution-intensive industries are displaced to other regions, creating a bias in the analysis. This study, therefore, examines the validity of EKC hypothesis, focussing on the consumption pattern of economies. The first model considers manufacturing consumption and the second model considers final consumption expenditure as the environmental indicator. Using dynamic panel data model, the study fails to find evidence in support of the EKC hypothesis.