Effects of Climate Change to Industrial Outputs and Employment in Asian Emerging Economies

It is well-established that climate change can be the result of human activities that create greenhouse gas emissions, which causes the greenhouse effect and further lead to the net effect of global warming. As far as the effects of climate change to human health and outputs of economic sectors are concerned, we can expect there will be negative impacts on output and employment. The objective of this study is to investigate the climate change effects to industrial output and employment in the context of ASEAN, by focusing on six emerging economies, namely, Cambodia, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam for the period of 1989–2016. We use temperature and precipitation as the proxies for climate change. We apply the bounds testing procedure proposed by Pesaran et al. (Journal of Applied Econometrics 16:289–326, 2001) to analyse the cointegration relationship and the autoregressive distributed lag (ARDL) modelling approach of Pesaran and Shin (An autoregressive distributed lag modeling approach to cointegration analysis. In: Strom S (ed) Econometrics and economic theory in the 20th century: the Ragnar Frisch centennial symposium. Cambridge University Press, Cambridge, 1999) and Pesaran et al. (Journal of Applied Econometrics 16:289–326, 2001) for the long-run and short-run relationships between industrial output and employment with the climate change variables. We found long-run relationship between climate change, industrial output and employment in all the countries analysed, except for the industrial output in Vietnam. Further, the long-run and short-run results show some similarities and variations. Our findings allow us to suggest different policy implications for long run and short run based on our results.