Do pollution levels decrease as a developing country's income rises? This research scrutinizes the association between pollution and income within Malaysia, a country boasting robust environmental quality data. Unlike previous cross-sectional or panel data analyses spanning multiple nations, this study focuses on a single country to provide a more nuanced understanding of the Environmental Kuznets Curve (EKC). The research findings reveal that pollution-income relationships derived from cross-country studies fail to accurately predict trends in Malaysia. None of the six pollution-income relationships estimated for Malaysian states exhibited the hypothesized EKC form. The evidence suggests that policy decisions exert a substantial influence on environmental outcomes. Ultimately, this study underscores the critical role of country-specific policy decisions in shaping environmental outcomes and questions the universal applicability of pollution-income relationships derived from cross-country analyses. The paper emphasizes the complexity of environmental economics and the need for tailored approaches.
As a contribution to Environment and Development Economics, this paper directly addresses the journal's interest in the interplay between economic progress and environmental sustainability, using Malaysia as a case study. The work challenges established theories within the field and emphasizes the impact of policy decisions on environmental outcomes, making it pertinent to the journal's readership.