An analysis on factors that contributed to environmental degradation in selected ASEAN 5 countries

Ong, Connie Kher Ni and Ch'ng, Hui Teng and Ooi, Zheng Yien and Tan, Jia Syen and Yeoh, Wen Lin (2020) An analysis on factors that contributed to environmental degradation in selected ASEAN 5 countries. Final Year Project, UTAR.

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Abstract

Carbon Dioxide (CO2) emissions were one of the major contributors to environmental degradation. This research aims to investigate the relationship between CO2 emissions and combination of four independent variables which are gross domestic product, foreign direct investment inflows, domestic credit to private sector and individuals using the internet. This scope of research includes Indonesia, Malaysia, Thailand, Philippines, and Vietnam and the sample period started from year 2004 to 2017. The techniques used to estimate our econometric model include Pooled Ordinary Least Squares, Fixed Effects Model and Random Effects Model which all will be measured using EViews. The empirical results show that gross domestic product, domestic credit to private sector and individuals using the internet are positive and significantly related with CO2 emissions. In other words, the economic growth and financial development of a country will stimulate the economic activity of a nation and further lead to CO2 emissions. The used of internet in economic activities will also contributed to CO2 emissions. Additionally, the result also discovers that there is an insignificant relationship between CO2 emissions and foreign direct investment inflows. This is attributable to the flows of investment to ASEAN countries that majority goes to services sector that contribute less CO2 emissions as compared to manufacturing sector. The result does not support the validity of Environmental Kuznets Curve Hypothesis and Pollution Haven Hypothesis in selected ASEAN-5 countries. The research is useful for government and policymaker in implementing their policies as to reduce the emissions of greenhouse gases and slow down the environmental degradation.

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