The decoupling process of CO2 emissions and economic growth : A comparative study between the European Union and middle income countries in South and East Asia

Abstract: This paper compares and analyzes the decoupling processes of carbon emissions to economic growth in the European Union and South and East Asian middle income countries. This is done through econometric methods, testing for a relationship between CO2 and GDP. The study is conducted by first testing for the hypothesis that there is a significant difference of the turning points between the EU and the Asian region, and thereafter if there is a significant difference in the decoupling processes. The findings show that the Asian middle income countries have a lower turning point than the EU. It is also found that the EU experienced absolute decoupling in 2014, whereas the Asian countries only experienced weak relative decoupling. The study is based on four theories; The Environmental Kuznets curve, Tapio’s Decoupling model Theory, Rostow’s Stage of Growth Theory and the Ecological Modernization Theory. The findings, together with the theories, show that improved technology, together with implementations of international policies, can have positive effects on environmental changes.