A new environmental Kuznets curve? Relationship between direct material input and income per capita: evidence from industrialised countries

Many studies have focused on the quantification of the input of materials into the economy. However, the insights provided by those studies have generally been limited. This paper attempts to bring analytical value to the discussion on "dematerialization" considering direct material input (DMI) per capita as the dependent variable in a test of the environmental Kuznets curve (EKC). The explanatory variable is, as usual, gross domestic product per capita. The quadratic and cubic versions of the EKC are tested econometrically, using panel data ranging from 1960 to 1998 for 16 industrialised countries. The results indicate a strong and robust support for both the quadratic and cubic EKC relationships between material input and income, in industrialised economies. While the statistical support to both types of evolution may seem contradictory, it suggests that as industrialised economies grow, the intensity of material consumption first increases, but eventually starts exhibiting a decreasing trend after a certain income threshold is reached. The inverted-U, or quadratic, relationship is confirmed, even though for the ranges of income considered in this study, the trend is mostly on the increasing part of the inverted-U curve. However, the statistical support to the cubic specification suggests that these results need to be regarded with caution. Overall, the statistically stronger models are the quadratic and cubic models with country random effects, and the cubic model with country and year fixed effects. (C) 2003 Elsevier B.V. All rights reserved.