The EU Green Agenda legal framework and economic growth in developing countries: a panel EKC approach

DOI: https://doi.org/10.3846/btp.2025.23716

Abstract

With the rapid rate of climatic change and environmental degradation, sustainable economic growth with conservation of the environment has turned into a question of highest priority and concern for the world, especially for developing nations. The study aims to interpret the European Green Agenda legal framework and its implications for the green economy of developing countries using the Environmental Kuznets Curve EKC as a basis of panel estimation. The research method used is quantitative, using data from 1990 to 2024 from the World Bank Indicators. The econometric approach is based on panel data employing the Environmental Kuznets hypothesis for further empirical estimation. The variables included in the model are Carbon Intensity CO2, and GDP per capita growth in a panel of 6WB countries such as Kosovo, North Macedonia, Albania, Montenegro, Bosnia and Herzegovina and Serbia. The main hypothesis testing is that the developing countries face greater CO2 emission in their attempt to grow economically, which is also the main hypothesis under the Environmental Kuznets Curve. The study finds a U-shaped relationship function between GDP per capita growth and Carbon Intensity CO2 in the case of the Western Balkans under study circumstances. The greater the GDP per capita growth (above the turning point level of 4259.69), the greater the Carbon intensity. The study further concludes that the EKC hypothesis does not have universal implications depending on the stage of country development and the period under investigation. This study is very important for several reasons: first, it is the first testing the basic EKC hypothesis for the Western Balkan countries and adds to the literature the fact that the EKC hypothesis is not universal; second, by using econometric models of panel data, it tests the EKC hypothesis and proves the opposite, an U function; between CO2 and GDP per capita growth and third, the study emphasizes the importance of the European Green Agenda towards sustainable economic growth and environmental protection.

Keywords:

Green Agenda, legal framework, Environmental Kuznets Curve, CO2, GDP per capita growth

How to Cite

Ziberi, B. F., Ibraimi, X., Ahmad, N., & Vveinhardt, J. (2025). The EU Green Agenda legal framework and economic growth in developing countries: a panel EKC approach. Business: Theory and Practice, 26(2), 305–322. https://doi.org/10.3846/btp.2025.23716

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August 28, 2025
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2025-08-28

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Ziberi, B. F., Ibraimi, X., Ahmad, N., & Vveinhardt, J. (2025). The EU Green Agenda legal framework and economic growth in developing countries: a panel EKC approach. Business: Theory and Practice, 26(2), 305–322. https://doi.org/10.3846/btp.2025.23716

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