The Environmental Kuznets Curve

Article: Do Developing Countries Enjoy Latecomers’ Advantages in
Environmental Management and Technology? – Analysis of the Environmental Kuznets Curve

Author: Hiroyuki Taguchi

Journal: International Review for Environmental Strategies. Vol. 2 No. 2,

Winter 2001. pp. 263-276.

Hiroyuki Taguchi anchored the premise of his thesis question, “Do developing countries enjoy latecomers’ advantages in Environmental Management and Technology?” from an “intriguing hypothesis” advanced by Simon Kuznets in 1955. The hypothesis states that in the course of economic development, income disparities rise at first and then begin to fall.

As applied to environmental management and technology, the Kuznets premise is used to buttress up the hypothesis that environmental degradation rises at first and then falls in the course of economic development. Indeed, Taguchi used an analysis of the Environmental Kuznets (EK) curve to determine whether developing countries have, in the course of their industrialization, capitalized on the experiences of developed countries.

Taguchi defined latecomers’ advantages as the availability of capital, skills, and technology of more advanced countries to the maximum extent possible.

The idea behind Taguchi’s study centers on the premise that it comes as a matter of course for developing countries to suffer setbacks in environmental conservation as they proceed through the process of industrialization. But as these countries become more wealthy and their industrial means become more sophisticated, their citizens become more environment conscious and their governments start implementing tougher measures in protecting the environment.

But unlike the route taken by developed countries through their industrialization, developing countries have the assumed advantage of learning from the experiences of more developed countries, and starting off an industrial program that can readily capitalize on existing funding, skills, and technology that were harnessed through time.

Based on the data gathered from a regional survey on developing East Asian Countries, Taguchi’s study concludes that in fact, developing countries enjoy latecomers’ advantages in environmental management and technology.

Despite convincing results in favor of Taguchi’s conclusions however, his study could have given more justice to the link between environmental conservation and economic development had he figured as elemental to his study, the nature of the environment as a system that is a closed continuum in itself. Which means that while it may be valid to assert that sulfur and carbon emissions are logical indicators of environmental degradation, it cannot be claimed with certitude that the positive sloping in the EK curve is solely effected by these elements. Alternatively, sulfur and carbon emissions may yet prove to be just a part of a bigger cause or a wider effect that may be linked to other environmental processes that carry the same positive sloping in the EK curve.

The implication of this qualification is that, the positive sloping of the curve, which denotes environmental degradation, must be similarly situated as the negative sloping, which denotes recovery. Which means that if degradation is on account of sulfur emissions and the industries or machines that produced them, recovery must translate into a decline of sulfur emissions (not other emissions) and the stoppage of sulfur emissions by industries or machines that initially produced them, and not by some other means like active volcanoes (with high concentrations of sulfur emissions) suddenly becoming dormant.

The importance of the above qualification centers on probable avenues for intervention in flattening out the peaking of the EK curve. In other words, if the link between economic development and environmental conservation is valid, the same link is only as important as the available measures taken by developing countries to leapfrog over environmental difficulties with progressive environmental management and technology.

Another aspect to Taguchi’s study that needs further analysis is the question on whether the latecomers’ advantages can apply to a broader range of per capita GDP. Of course, a lower GDP means less resilience for environmental recovery and more dependence on skills and technology. But even skills and technology are commodified. Which brings the concern to another aspect of the study. There needs to be an authentic technology transfer to make leapfrogging not only possible but sustainable as well. Are the developed countries willing to facilitate technology transfer for the developing countries’ environmental conservation efforts? Would they be willing to let go of trade restrictions particularly on those that involve Intellectual property rights?

The strength of Taguchi’s study is undeniably his use of appropriate statistical tools in interpreting the existence of an environmental Kuznets curve that provides a comparative study on the link between environmental conservation and economic development taken from the economic performances and environmental initiatives undertaken by different developing countries. Taguchi though, did recognize that the geo-economic profiles of the countries he considered in his study are comparatively diverse and for which reason, he did not readily accept as direct proof, the results of his survey as establishing the existence of latecomers’ advantages. He went further on to carry out a regression analysis that rightly confirmed his hypothesis.

Taguchi has rightly intimated towards the end of his discourse, the need to consider in the Kuznets analysis, more environmental factors to validate further his conclusions of the existence of latecomers’ advantages and provide developing countries with more options to leapfrog over environmental difficulties, flatten the curve’s peak, and avoid irreversible environmental degradations.