Environmental Quality, Trade Openness and Economic Growth in Kenya :an Implication of the Environmental Kuznets Curve.

Abstract

This paper seeks to examine the applicability of the Environmental Kuznets Curve (EKC) in Kenya and the effects of trade openness on the environment for the period 1960-2012. In the study, environmental quality is proxied by ecological footprint. The study is motivated by the harsh realities on the country’s poverty status and its vulnerability to the effects of climate change. There has been increasing environmental degradation despite the growing affluence. This is against the postulates of the EKC, hence the need to investigate its applicability. The ARDL model is used in the analysis. The results reveal that Real GDP per capita has a negative effect on environmental quality in the long run and therefore the EKC hypothesis is not valid for Kenya. The paper therefore recommends that policy makers try to achieve inclusive economic growth and sustainable development simultaneously instead of expecting that growth will automatically lead to a better environment. Trade openness is observed to have a negative effect on the environment in the short run and a positive effect in the long run. Opening up is therefore encouraged as it will facilitate transfer of clean technologies, hence improving environmental quality in Kenya