Abstract
This study analyzes the impact of economic structure and intensity on the level of air pollution. This is done by the
estimation of Structural Equation Model with two latent variables describing the economic structure and the intensity
of economic activity, which influence air pollution. It is further assumed that there are causal link with these two
factors, one of them is influenced by international trade intensity, per capita income and the level of trade
liberalization, the other is influenced by urban percentage and industry.
The estimation results suggest that the impact of economic growth on air pollution intensity varies in the structure
and the intensity of economic activity. The estimation results show that the structure effect which is 0.85 is higher
than intensity which is 0.05 on the level of air pollution. Model with the better fit to the data, indices of goodness-offit
are relatively satisfaction and meet the requirements. This results show that for many developing countries,
urbanization and industrialization change economic structure-as a consequence-to increase air pollution.
Keywords: Urban; Industry; Trade; Air pollution
1. Introduction
The relationship between economic growth and environmental quality is the object of wide debate. At
the very center of this discussion stands the concept of the Environmental Kuznets Curve (EKC). The
EKC hypothesis is usually described by three effects: (a) the effect of the scale of economic activity, (b)
the effect of the changes in the structure of economic activity and (c) the effect of income on the demand