Relationship between Ecological Footprint and Economic Growth in D8 Countries: Testing the Kuznets Environmental Hypothesis Using PSTR Model

This study examines the Kuznets environmental curve among D8 countries in the period 1961–2016. The Kuznets environmental curve shows the reversed U-shaped relationship between economic growth and environmental degradation. In this paper, two methods of time series estimation and smooth panel transition estimation were used to test the hypothesis of this relationship. Also, the ecological footprint index was used as an indicator of environmental degradation. The time series estimation results show that there is a nonlinear relationship in all D8 countries but the classical Kuznets hypothesis was confirmed only in Malaysia, Egypt and Turkey and in other countries the relationship was not inverted U. In Iran, the relationship between GDP per capita and the per capita ecological footprint is N-shaped, and at the GDP levels of $5864 and $10514, the relationship between the two variables will change. On the other hand, testing of the Kuznets hypothesis by using panel smooth transition models showed that there was a nonlinear relationship between GDP and ecological footprint in D8 countries with a threshold. There was a direct relationship between ecological footprint and GDP per capita when economic growth below 8.3 percent and reverse relationship when economic growth above 8.3 percent