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Understanding the Economic Drivers of Climate Change in Southeast Asia: An Econometric Analysis

Author

Listed:
  • Agung Suwandaru

    (School of Business, Western Sydney University, Sydney, NSW 2150, Australia)

  • Widhiyo Sudiyono

    (Faculty of Economics & Business, University of Muhammadiyah Malang, Malang 65144, Indonesia
    Discipline of Business Analytics, The University of Sydney, Sydney, NSW 2006, Australia)

  • Ahmed Shawdari

    (School of Business, Western Sydney University, Sydney, NSW 2150, Australia
    International Relations, Bilateral Relations, Ministry of Finance, Riyadh 11177, Saudi Arabia)

  • Yuntawati Fristin

    (Faculty Social and Political Science, University Merdeka Malang, Malang 65146, Indonesia)

Abstract

This study analyses macroeconomic trends in Southeast Asian countries and their implications for climate change, focusing on urbanisation, GDP per capita, energy intensity, FDI, inflation, and trade. Using panel data from 1970 to 2020, we investigate climate change drivers across Indonesia, Malaysia, the Philippines, Singapore, and Thailand through panel ARDL with PMG and MG analyses, along with Hausman tests. Our results highlight the need for tailored urbanisation policies for sustainability, as the consistent positive correlation between GDPs per capita and emissions, underscores the challenge of decoupling economic growth from emissions. Urbanisation’s varying impact calls for proactive planning, and mixed FDI results suggest nuanced investment approaches aligned with sustainability. Inflation’s negative impact hints at environmental benefits during price increases, necessitating integrated economic and climate policies. The positive relationship between trade openness and emissions emphasises the need for eco-conscious trade agreements to mitigate emissions from industrial activity. Our study stresses the importance of considering macroeconomic heterogeneity in crafting climate policies. Policymakers must adopt multifaceted approaches that prioritise sustainability across economic growth, energy efficiency, technology adoption, and trade to balance development with environmental preservation. This approach enables Southeast Asian countries to contribute effectively to global climate change mitigation.

Suggested Citation

  • Agung Suwandaru & Widhiyo Sudiyono & Ahmed Shawdari & Yuntawati Fristin, 2024. "Understanding the Economic Drivers of Climate Change in Southeast Asia: An Econometric Analysis," Economies, MDPI, vol. 12(8), pages 1-21, August.
    • Handle: RePEc:gam:jecomi:v:12:y:2024:i:8:p:200-:d:1450463
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    References listed on IDEAS

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    5. Maximilian Konradt & Beatrice Weder, 2023. "Carbon Taxation and Greenflation: Evidence from Europe and Canada," Journal of the European Economic Association, European Economic Association, vol. 21(6), pages 2518-2546.
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