The Impacts of Economic Growth on Environmental Conditions in Laos

This study aims to examine the relationship between economic growth and environmental degradation. The carbon dioxide emission (CO_2 emissions) per capita is used to be a proxy for environmental degradation, using time series data from the period between 1980 and 2010. To avoid the problems of non-stationary associated with time series analysis, the Dickey-Fuller unit roots is checked as to ascertain whether the variables are stationary, by transforming the dependent and independent variables in the first different operator form. This study is based on the hypothesis of the Environmental Kuznets Curve (EKC) that environmental degradation follows an inverted U-shaped trajectory in relation to economic growth. The result of this study confirms the invested correlation between economic growth and environmental degradation of EKC’s hypothesis that at the early stage economic growth increases environmental degradation, then environmental degradation decreases after reaching a certain level of average income per capita. Moreover, other factors, such as trade openness, industrial extension, and becoming a full member of ASEAN, also cause an increase in environmental degradation. In order to reach the sustainable development goal, strong environmental and natural resource protection policies are suggested for the current and future development of Laos.