The role of financial development, energy demand, and technological change in environmental sustainability agenda: evidence from selected Asian countries.

Abstract

The study seeks to examine the policy scheme of Asian countries and their efforts to achieve sustainable environmental practices in terms of green growth, green financing, and CO2emission reduction programs. This study investigates the role of GDP growth, sources of energy consumption, and other plausible hypothetical factors in CO2 emissions using evidence from selected Asian countries over the period of 1980-2015. The contribution of this research is unique, with the use of these plausible variables under the framework of EKC, which makes this study different from other studies and helps fill a gap in the literature. This study has used panel Fully Modified OLS (FMOLS) test, the panel Granger causality test namely the Dumitrescu-Hurlin test (2012) and the Innovative Accounting Approach. The results of FMOLS for the full panel set indicates the presence of an EKC hypothesis, where the impact of GDP growth and the square of GDP growth on CO2 emissions are positive and negative, respectively, in the context of 10 Asian economies. The findings of FMOLS for lower income economies do not support the EKC hypothesis; however, the results exhibit that high and upper middle income economies maintain the EKC hypothesis. The results of high income and upper middle income economies confirm the existence of the environment Kuznets curve, and the results of GDPit show that both significantly positively impact logGDPiton CO2 emission.