Factors Affecting Co2 Emissions in Selected S...

Factors Affecting Co2 Emissions in Selected South Asian Countries: A Panel Data Analysis

Author Name : W.M.T.J. Wanigasuriya

ABSTRACT

Industrialization, increase in population growth, and trade liberalization is playing a critical role in environmental pollution. Greenhouse gas emission and carbon emission are outcomes of those activities. The causal relationship between economic activities and carbon dioxide emissions has received global attention in recent decades. At present this issue has become a political and economic choice. The aim of this article is to empirically analyze the factors affecting carbon emission across selected South Asian countries namely, Sri Lanka, Bangladesh, Pakistan, India, and Nepal. This article incorporated annual time series data stemming from 1960 to 2019 and employed panel unit root test, Pedroni test of cointegration, panel Fully Modified Ordinary Least Squares (FMOLS), and Ordinary Least Squares (DOLS), and panel Vector Error Correction Model (VECM) to explain the factors affecting for carbon emission. The panel cointegration test result found a long-term relationship between carbon (CO2) emissions, GDP, trade openness, and population. According to the FMOLS, it shows that all three variables are significant to explain the carbon emission. And also it shows that trade openness also leads to more carbon emissions. Since that, the trade liberalizations should be made efficient to reduce carbon emission. Therefore, the findings suggest that carbon emission should be reduced by introducing low carbon technologies to gain sustainable economic growth.

Keywords: Carbon emission, Co-integration, Economic growth, South Asia