Will the EKC hold for non-democratic governments?
Posted by Daniel Hall on September 21, 2007
This may be me misunderstanding, but one problem I have with EKC is that it seems like an economic explanation of a primarily political phenomenon. … [Y]our explanation seems like an argument that rising incomes allow different preferences to be expressed in the marketplace. It seems to me, though, that the primary thing that actually moves environmental quality, at least over the past forty years, is government regulation (including, obviously, market-based regulations).
I certainly agree with Greg that regulation has been the major driver of improved environmental quality in the developed world. In terms of his comment about the EKC being an economic explanation of this political phenomenon, I have a couple things to say. The first is that for researchers the EKC hypothesis is an observation, not an explanation; it is a question of empirics, not theory. Indeed, one of the slightly odd things about the EKC literature is how replete it is with caveats that the authors are not forwarding a theoretical explanation. The second thing is to acknowledge that this is not very satisfactory; people want to know why something happens. Just saying that an empirical relationship exists but refusing to explain it is — I suspect — a big part of why some people think economists are BOR-ING! Since to my mind being boring is far worse than being wrong, I will wade into murky waters and speculate on why.
I tend to think of the EKC relationship — where it exists — as being driven by preferences for environmental quality, which increase with rising income. Historically these preferences have mainly been expressed through government: voting, lobbying, bringing lawsuits, etc., were all processes that created our current environmental regulations.* This was possible because the countries that are now wealthy and post-industrial were also democratic.
This leaves an interesting question: if preferences for environmental quality are expressed mostly through democratic processes, will non-democratic countries follow the EKC curve? China is the example that jumps immediately to mind: will a rising middle class in China demand a better environment? What about an increasingly authoritarian Russia? Or any number of countries with despotic thieves for rulers?
What do readers think? Are there non-democratic regimes that have cleaned up the environment in response to internal pressure? Can countries that industrialize under governments that are either authoritarian or kleptocratic then clean up (without the government being swept out of power)? I am curious to hear others’ thoughts.
*There are also some examples of preferences being expressed in markets; organic food is one.