A European Material Kuznets Curve

Abstract: This bachelor thesis investigates the correlation between 28 European countries’material footprints (MF), as proxied by their Raw Material Consumption (RMC)per capita, and the environmental impact indicated by their carbon dioxide (CO2)emissions per capita, respectively, with their economic development, measured bytheir purchase power parity adjusted gross domestic product (GDP) per capita,during the period of 2008 to 2019. Specifically, through the theoretical frameworkof the Environmental Kuznets Curve (EKC) and by utilizing Fixed EffectsOrdinary Least Squares regression models as well as Pooled Mean Groupestimation, the thesis asks whether or not evidence can be found for the possibleexistence of an EKC, an inverted-U shaped relationship between environmentaldegradation and economic development, within this European context. Theoverarching aim of this thesis, however, is to furthermore attempt to broaden theEKC theory by precisely scoping out the empirical viability of applying it tocountries’ MFs as a proxy for environmental degradation beyond the existingEKC literatures’ previous focus on more local and specific measures. However, infinding somewhat conflicting evidence of what relationship in fact residesbetween either set of variables of interest, we are unable to confidently confirmthe existence of an EKC for Europe. Although, in finding consistent evidence of apositive but diminishing relationship between RMC and GDP per capita, weconfirm our weaker conclusion that Europe is in fact facing an increasingdecoupling between its economic activities and material footprints as it growseconomically. Therefore, the thesis concludes that countries’ MFs indeed is aviable measure of concern for the EKC theory and our understanding of howintricately economic development is tied with its environmental impact than might be imagined.