CO2 Emissions and Productivity in APEC Member Economies

Abstract

Global warming is one of the most important issues globally. In 1997 the Kyoto Protocol regulated the greenhouse gas reduction obligation of developed economies. This study takes carbon dioxide as an undesirable output and respectively uses Malmquist and Malmquist-Luenberger indices to compute the productivity change of APEC member economies. A panel dataset of 15 APEC economies from 1995 to 2003 is constructed. Developed economies have higher productivity if CO2 emission is not considered in the Malmquist index. Since developed economies face stricter CO2 abatement obligations, they have lower productivity than developing nations if the CO2 abatement is taken into account in the Malmquist-Luenberger index. This study has found that, in terms of the Malmquist productivity index, the average productivity indices and technical changes of 15 economies generally regressed during the observation period. There are productivity improvements in Oceania and Central and South America. In terms of the degree of development, the productivity of developed economies is superior to that of developing economies. Developed economies have generally accepted higher productivity while disregarding CO2 emission.