Role of financial development, economic growth & foreign direct investment in driving climate change: A case of emerging ASEAN

Muhammad Ali Nasir, Toan Luu Duc Huynh, Huong Thi Xuan Tram

Research output: Contribution to journalArticle

35 Citations (Scopus)

Abstract

In the context of remarkable economic growth and financial development in the emerging economies of East Asia, this paper attempts to shed light on the ecological consequences (CO2 emission) of economic growth, foreign direct investment and financial development in the selected ASEAN-5 economies. Drawing on the data from 1982 to 2014, we employed a set of quantitative techniques for panel data analysis which entailed Dynamic Ordinary Least Squares (DOLS) and Fully Modified OLS (FMOLS) approaches. Our findings indicate that financial and economic development, as well as FDI, have a statistically significant long-run co-integrating relationship with environmental degradation (CO2 emissions) in the under analysis economies. It showed that in ASEAN-5 countries, economic growth, financial development and FDI leads to an increase in environmental degradation. The quadratic term for economic growth showed a negative impact on environmental degradation i.e. Environmental Kuznets Curve (EKC). Our key findings manifest and emphasise the importance of appropriate policies for more inclusive economic and financial development and sustainable foreign direct investment which does not impede on the environment.

Original languageEnglish
Pages (from-to)131-141
Number of pages11
JournalJournal of Environmental Management
Volume242
Early online date25 Apr 2019
DOIs
Publication statusPublished - 15 Jul 2019
Externally publishedYes

Fingerprint Dive into the research topics of 'Role of financial development, economic growth & foreign direct investment in driving climate change: A case of emerging ASEAN'. Together they form a unique fingerprint.

  • Cite this