Economic growth in South Asia: the role of CO2 emissions, population density and trade openness

Abstract

This study investigates the impact of CO2 emissions, population density, and trade openness on the economic growth of five South Asian countries. Using data from 1990 to 2017 the panel co-integration approach of extended neoclassical growth model is used. The obtained results reveal that CO2 emissions and population density positively and trade openness negatively affect the economic growth in South Asia. The extent of effect of population density is greater than that of CO2 emissions. Granger causality results exhibit a bidirectional causality between economic growth and CO2 emissions, and between trade openness and CO2 emissions. There is a unidirectional causality running from trade openness to economic growth, from population density to CO2 emissions and from labor to economic growth and population density. A detailed policy prescription is provided based on the findings.