From growth to green: Navigating the complexities of economic development, energy sources, health spending, and carbon emissions in Malaysia

Abstract

This study analyzes the impact of economic expansion, fossil fuel consumption, renewable energy adoption, and health expenditure on carbon dioxide (CO2) emissions in Malaysia from 1990 to 2021. The autoregressive distributed lag (ARDL) method is used to examine short and long-term consequences. The ARDL bounds test revealed evidence of cointegration among the variables in the long run which is verified by the Johansen cointegration test and Engle-Granger cointegration test. The empirical results suggest that increased economic expansion and fossil fuel usage are associated with higher CO2 emissions. In contrast, renewable energy use and health expenditure are linked with lower CO2 emissions in the long term. The Toda-Yamamoto causality test is also employed to investigate causal relationships between variables. The study recommends that the Malaysian government invest in green technology and promote policies that encourage sustainable practices. A green growth approach can ensure economic growth, mitigate environmental challenges, and achieve sustainable development goals. Health initiatives should also be prioritized to promote economic growth while mitigating environmental damage. This approach can reduce the country's reliance on fossil fuels, create new employment opportunities, and contribute to the overall well-being of the population. In conclusion, Malaysia's economic growth has led to an increase in energy demand and CO2 emissions. However, adopting a green growth approach by investing in renewable energy, sustainable practices, and health initiatives can pave the way for a sustainable and prosperous future.