Environmental Kuznets Curve Hypothesis: A Perspective of Sustainable Development in Indonesia

Abstract

Sustainable development with three main pillars, namely environmental, economic, and social, is the concept of country’s development to achieve inclusive economic growth, good environmental quality, and improvement of people's welfare. However, the dominance of economic factors cause various environmental problem. This phenomenon occurs in most of developing countries, including in Indonesia. The relationship between economic activity and environmental quality has been widely discussed and empirically tested by scholars. This descriptive research analysed the hypothesis called Environmental Kuznets Curve (EKC) from a perspective of sustainable development in Indonesia. EKC hypothesis illustrates the relationship between economic growth and environmental degradation forming an inverted U-curve, indicating that at the beginning of development, environmental quality will decrease along with increasing economic growth, and then reached a certain point the environmental quality will gradually improve. In this paper will be discussed how the relationship between environmental quality and economic growth in Indonesia was investigated. The preliminary results show that most of the empirical studies use the conventional approach, in which the CO2 emission used as the proxy of environmental degradation. The existence of inverted U-curve is also inconclusive. Therefore, the extension research on the relationship between economic growth and environmental quality in Indonesia using the EKC hypothesis is required.