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Do technology and structural changes favour environment in Malaysia: an ARDL-based evidence for environmental Kuznets curve

Author

Listed:
  • Wajahat Ali

    (Sarhad University of Science and Information Technology)

  • Inam Ur Rahman

    (Sarhad University of Science and Information Technology)

  • Muhammad Zahid

    (City University of Science and IT)

  • Muhammad Anees Khan

    (Bahria University)

  • Tafazal Kumail

    (Guangxi University of Finance and Economics)

Abstract

The current study is an effort to investigate the relationship between technological innovation, structural changes, and carbon dioxide emission (CO2) along with the energy use and economic growth in the context of environmental Kuznets curve (EKC) over a period from 1985 to 2016. The study adopted the Zivot Andrews unit root test to check for the level of stationarity of the study variables. Based on the stationarity level, the study adopted autoregressive distributed lag (ARDL) approach to cointegration to investigate the presence of long- and short-run associations, simultaneously. To confirm the outcome of the ARDL bounds test in the presence of structural breaks, the study further applied the Gregory Hansen test of cointegration. The results reveal that industry value added in Malaysia has no significant impact on CO2 emissions. The results further posit that improvement in technology can lead to a cleaner environment. Regardless of improvements in technology and insignificant pressure of industrial activities towards environment, the results are not in the favour of the EKC hypothesis neither under the conventional turning point formula nor under the new turning point formula. The results reveal that long-run CO2 emission is bidirectionally related to energy use, structural changes, and technological innovation. The short-run results indicate bidirectional causalities between energy consumption, structural change, and CO2 emissions. The study suggests that the government should overhaul the structure of the energy in Malaysia to overcome both the losses in the production process and to reduce carbon emissions by inspiring the induction of environment-friendly and efficient technologies in the production process and a shift towards more services sector economy. The outcomes of the study are according to the theory of ecological modernization.

Suggested Citation

  • Wajahat Ali & Inam Ur Rahman & Muhammad Zahid & Muhammad Anees Khan & Tafazal Kumail, 2020. "Do technology and structural changes favour environment in Malaysia: an ARDL-based evidence for environmental Kuznets curve," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 22(8), pages 7927-7950, December.
    • Handle: RePEc:spr:endesu:v:22:y:2020:i:8:d:10.1007_s10668-019-00554-7
    DOI: 10.1007/s10668-019-00554-7
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    More about this item

    Keywords

    CO2 emissions; EKC; Technological innovation; Structural change;
    All these keywords.

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q59 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Other
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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