Relationships between human development, economic growth, and environmental condition: The case of South Korea

The study examines the long-term relationships between human development, economic growth, and environmental conditions in South Korea from 1996 to 2021. Understanding these interactions is crucial for shaping policies that balance economic progress, social well-being, and environmental sustainability. The analysis employs cointegration techniques, including the Fully Modified Ordinary Least Squares (FMOLS) and Canonical Cointegration Regression (CCR) methods, to estimate long-run relationships among GDP per capita, the Human Development Index (HDI), and carbon dioxide emissions per capita. Empirical findings confirm a stable long-term equilibrium between GDP and HDI, as demonstrated by significant Engle-Granger and Phillips-Ouliaris test statistics (p-values ≤ 0.0245). The results suggest that economic growth consistently enhances human development, while improvements in HDI contribute to sustained economic progress. The relationship between HDI and carbon emissions per capita, however, yields mixed evidence. The Engle-Granger test supports a long-term association (p-values ≤ 0.015), but the Phillips-Ouliaris test does not confirm cointegration (p-values ≥ 0.112). The covariance matrix test indicates that the negative relationship between HDI and carbon emissions per capita is stronger and more variable compared to the more stable inverse association between HDI and GDP per capita. Additionally, Granger causality analysis reveals a significant causal relationship between HDI and GDP per capita, supported by a Chi-square value of 20.627 and a p-value below 0.001. These findings highlight the complexity of integrating environmental considerations into development policies. South Korea’s experience underscores the necessity of a balanced policy framework that ensures sustainable economic growth while advancing human development and mitigating environmental impacts.