Exploring the liaison between industrial CO2 emissions and economic growth in ASEAN countries: A dis-aggregated analysis

Abstract

Global warming has become an emerging and serious issue in the world, with adverse effects on human life and a threat to survival. Besides being a key contributor to a country's economic growth (EG), the manufacturing and construction sector (M&C) is also one of the major sectors that cause environmental degradation. We investigate the link between M&C’s CO2E and economic growth (both overall and sectoral growth) in the context of the Environmental Kuznets Curve (EKC) at aggregate and disaggregate levels in the Associations of Southeast Asia Nations (ASEAN), using data from 1995 to 2018. We employ the feasible generalized least squares (FGLS) and Panel-Corrected Standard Errors (PCSE) estimation techniques to examine the existence of the Environmental Kuznets Curve (EKC) at aggregate and disaggregate levels in ASEAN countries. We find evidence of an inverted U-shaped EKC at both the aggregate and disaggregate levels. After including other variables such as financial development, urbanization, foreign direct investment, and manufactured goods exports, our findings are robust and statistically significant. Our study suggests that policymakers should sanction such measures to reduce CO2 emissions from the M&C sector while maintaining economic growth.