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The Impacts of Energy Consumption by Sector and Foreign Direct Investment on CO 2 Emissions in Malaysia

Author

Listed:
  • Mohd Shahidan Shaari

    (Centre of Excellence for Social Innovation & Sustainability (CoESIS), Faculty of Business & Communication, Universiti Malaysia Perlis, Arau 02600, Malaysia)

  • Wen Chiat Lee

    (Faculty of Business and Management, Universiti Teknologi MARA, Sarawak Campus, Kota Samarahan 94300, Malaysia)

  • Abdul Rahim Ridzuan

    (Faculty of Business and Management, Universiti Teknologi MARA, Melaka Campus, Alor Gajah 78000, Malaysia
    Faculty of Economics and Business, Universitas Negeri Malang, Malang 65145, Indonesia
    Institute for Big Data Analytics and Artificial Intelligence, Institute for Research on Socio Economic Policy, Universiti Teknologi MARA, Shah Alam 40450, Malaysia
    Centre for Economic Development and Policy, Universiti Malaysia Sabah, Kota Kinabalu 88400, Malaysia)

  • Evan Lau

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Malaysia)

  • Faiz Masnan

    (Centre of Excellence for Social Innovation & Sustainability (CoESIS), Faculty of Business & Communication, Universiti Malaysia Perlis, Arau 02600, Malaysia)

Abstract

The global push for sustainable development has brought environmental issues to the fore. As minimizing environmental deterioration implies reducing energy consumption, this has come under intense discussion among economists and policymakers. This is because it may affect productivity, and thus slow economic growth ensues. Most earlier studies focused on overall energy consumption rather than energy use by sector to see how it can affect CO 2 emissions. However, little research has been conducted on the connection between energy use in particular sectors, such as agriculture and transportation, and CO 2 emissions. Therefore, this study aims to investigate the impacts of energy use in Malaysia’s transportation, industrial, and agricultural sectors and foreign direct investment (FDI) on CO 2 emissions between 1989 and 2019. The ARDL technique is employed, and the results demonstrate that energy consumption in the transportation sector has a greater impact on CO 2 emissions than in the industrial sector. On the other hand, energy use in the agricultural sector reduces CO 2 emissions. These findings may help policymakers formulate the right policies in specific sectors to benefit communities. They will be at low risk of suffering from diseases attributed to environmental degradation.

Suggested Citation

  • Mohd Shahidan Shaari & Wen Chiat Lee & Abdul Rahim Ridzuan & Evan Lau & Faiz Masnan, 2022. "The Impacts of Energy Consumption by Sector and Foreign Direct Investment on CO 2 Emissions in Malaysia," Sustainability, MDPI, vol. 14(23), pages 1-15, November.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:23:p:16028-:d:989551
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    References listed on IDEAS

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    2. Halimahton Borhan & Abdul Rahim Ridzuan & Mohamad Idham Md Razak & Rozita Naina Mohamed, 2023. "The Dynamic Relationship between Energy Consumption and Level of Unemployment Rates in Malaysia: A Time Series Analysis Based on ARDL Estimation," International Journal of Energy Economics and Policy, Econjournals, vol. 13(2), pages 207-214, March.
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