What are the dynamic links between agriculture and manufacturing growth and environmental degradation? Evidence from different panel income countries

The study investigates the causal association between sectoral growth of agriculture and manufacturing in Environmental Kuznets Curve (EKC) framework for 115 countries over the period 1990–2016. Results show a long-run equilibrium relationship between CO2, CH4 and PM2.5 emissions and their macroeconomic determinants of agriculture and manufacturing GDP growth, energy consumption, urbanization, trade openness and transportation. Further agricultural GDP growth (YA2) has not significant impact causing CO2 emissions for lower-middle, upper-middle- and high-income groups while it has a significant positive impact for low income group. In CH4 emission, agriculture sector shows an inverted U-shaped EKC for low, lower-middle, and high-income groups and in PM2.5 emissions for all the income groups. However, manufacturing GDP growth shows a U-shaped EKC on CO2 emissions and an inverted U-shaped EKC on CH4 emissions for all the income groups. In the subsequent, pair wise Granger causality test shows that the variables have bidirectional and/or unidirectional causality for all the income panels. Our results suggest that promoting sectoral energy efficient policies, greener technologies and stringent regulation by the government can shield environment from degradation in the country.