Following the Millennium Development Goals established by the United Nations in 2000, Sustainable Development Goals (SDGs) were proposed to the international community to work towards a sustainable living environment. In 1987, the United Nations’ working paper "Our Common Future" defined sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” The definition is not enough to come up with a commonly-agreed measurement, but there are indices that could help us understand the effects of sustainable development on three dimensions: environment, social well-being, and economics. In this paper, we first look at the major sustainable indices that are used in different fields. Then we construct a composite indicator for the three dimensions using the Principal Component Analysis (PCA) and Factor Analysis (FA). Furthermore, we test the existence of the Environmental Kuznets Curve (EKC), which suggests an inverted U shaped relationship between environmental degradation and economic growth. In particular, we perform a cross-country regression analysis, using a host of indicators, such as political variables, regulation effectiveness, and economic freedom.
We will first use the province-level data of the three dimensions to conduct PCA and FA analysis on a provincial level to compare the changes throughout the years. We will then test the EKC hypothesis to shed light on the effectiveness of economic growth and government policies in terms of improving environmental conditions.