How Does the Pattern of Economic Growth Impact the Environment? Empirical Insights from Developing Countries

Abstract

Countries around the world exhibit different patterns of economic growth, which can be broadly classified into resource-based economies and knowledge-based economies. The environmental impact of growth in these two types of economies varies significantly. It is commonly believed that resource-based economies tend to have higher emissions of CO2, NO2, and CH4, leading to environmental degradation. On the other hand, knowledge-based economies, which focus on human capital and innovation, typically have lower emissions. This study investigates the impact of economic growth patterns on the environment in 61 developing countries from 1986 to 2022. The empirical analysis carried out through GMM estimation technique to address endogeneity issues generally prevailing in panel data set.  Moreover, as the number of sectional units (N= 61) exceeds the time dimension (T=35), hence System GMM is used instead of difference GMM. The study findings indicate that countries experiencing knowledge-based economic growth tend to be more environmentally stable than those with resource-based economic growth. The study suggests that investing in technological innovation, human capital development, and renewable energy can help reduce emissions.