Testing The Environmental Kuznets Curve (EKC) Hypothesis in Indonesia and India: Autoregressive Distributed Lag (ARDL) Model Approach

Indanazulfa Qurrota A'yun(1*), Muhammad Safar Nasir(2), Zarul Azhar bin Nasir(3), Fatima Muhammad Abdulkarim(4), Murtaza Hussain(5)

(1) Faculty of Economics and Business, Universitas Ahmad Dahlan
(2) Department of Economics and Financial Studies, Universiti Teknologi MARA (UiTM)
(3) Faculty of Economics and Business, Universitas Ahmad Dahlan
(4) Faculty of Management and Social Sciences, Federal University Dutse, Jigawa State
(5) School of Economics and Finance, Xi’an Jiaotong University
(*) Corresponding Author

Abstract

The achievement of economic growth is equally important as environmental sustainability. Economic growth is considered capable of enhancing the overall welfare of society. However, there is a sacrifice stemming from economic growth in the form of negative external impacts. Therefore, the objective of this study is to examine the Environmental Kuznets Curve (EKC) hypothesis in Indonesia and India. The EKC hypothesis connects economic growth with CO2 emissions. The Autoregressive Distributed Lag (ARDL) model is employed to assess both the long-term and short-term impacts of economic growth on CO2 emissions in Indonesia and India. Additionally, the study seeks to comprehend the applicability of the Environmental Kuznets Curve (EKC) hypothesis in these countries over the period of 1965-2021. The research findings indicate that economic growth has a significant impact on CO2 emissions in the short term, but this influence is not sustained in the long term in Indonesia. In contrast, in India, economic growth does not exhibit a significant effect on CO2 emissions in the short term, but it does have a notable impact in the long term. This implies that Indonesia does not align with the Environmental Kuznets Curve (EKC) hypothesis in the long term, while India is anticipated to adhere to the EKC hypothesis in the future.

Keywords

ARDLM, EKC, Emission CO2, Environment

Full Text:

PDF

References

Alshehry, A.S. and Belloumi, M. (2015), “Energy consumption, carbon dioxide emissions and economic growth: the case of Saudi Arabia”, Renewable and Sustainable Energy Reviews, Vol. 41, pp. 237-247.

Bekun, F.V., Emir, F. and Sarkodie, S.A. (2019), “Another look at the relationship between energy consumption, carbon dioxide emissions, and economic growth in South Africa”, Science of The Total Environment, Vol. 655, pp. 759-765.

Canh, N.P., Thanh, S.D., Schinckus, C., Bensemann, J. and Thanh, L.T. (2019), “Global emissions: a new contribution from the shadow economy”, International Journal of Energy Economics and Policy, Vol. 9 No. 3, pp. 320-337.

Chen, C., Pinar, M., dan Stengos, T. (2022) Renewable Energy and CO2 emissions: New evidence with the panel threshold model. Renewable Energy, Vol. 194, 117-128.

Esen, O. and Bayrak, M. (2017), “Does more energy consumption support economic growth in net energy-importing countries?”, Journal of Economics, Finance and Administrative Science, Vol. 22 No. 42, pp. 75-98.

Ghazouani, T., Boukhatem, J. and Yan Sam, C. (2020), “Causal interactions between trade openness, renewable electricity consumption, and economic growth in Asia-Pacific countries: fresh evidence from a bootstrap ARDL approach”, Renewable and Sustainable Energy Reviews, Vol. 133, July, p. 110094.

Goetzke, Frank, and Tilmann Rave. 2015. “Regional air quality and happiness in Germany.” International Regional Science Review 38 (4):437-451.

Jun, W., Mahmood, H. and Zakaria, M. (2020), “Impact of trade openness on environment in China”, Journal of Business Economics and Management, Vol. 21 No. 4, pp. 1185-1202.

Karedla, Y., Mishra, R., dan Patel, N. (2021). The impact of economic growth, trade openness and manufacturing on CO2 emissions in India: an autoregressive distributive lag (ARDL) bounds test approach. Journal of Economics, Finance and Administrative Science, Vol. 26 No. 52, 2021 pp. 376-389.

Kılavuz, E. and Dogan, _I. (2020), “Economic growth, openness, industry and CO2 modelling: are regulatory policies important in Turkish economies?”, International Journal of Low-Carbon Technologies, Vol. 16 No. 2, pp. 476-487.

Landrigan, Philip J. 2017. “Air pollution and health.” The Lancet Public Health 2 (1):e4-e5.

Lin, B., Moubarak, M. and Ouyang, X. (2014), “Carbon dioxide emissions and growth of the manufacturing sector: evidence for China”, Vol. 76, 2014, pp. 830-837.

Lin, F. (2017), “Trade openness and air pollution: city-level empirical evidence from China”, China Economic Review, Vol. 45, pp. 78-88

Nikensari, Sri Indah, Destilawati, Sekar, dan Nurjanah, Siti. (2019). Study of Environmental Kuznets Curve in Asia: Before and After Millennium Development Goals. Jurnal Ekonomi dan Pembangunan, Vol. 27 no. 2 pp. 11-25.

Noor, M. A. and Saputra, P. M. A. (2020). Carbon Emission and Gross Domestic Prouduct: A Hypothetical Investigation on Environmental Kuznets Curve (EKC) in ASEAN Middle-Income Countries. Jurnal Wilayah dan Lingkungan, Vol. 8 no.3 pp. 230-246.

Purcel, A.A. (2020), “New insights into the environmental Kuznets Curve Hypothesis in developing and transition economies: a literature survey”, Environmental Economics and Policy Studies, Vol. 22, doi: 10.1007/s10018-020-00272-9.

Shahbaz, M. and Sinha, A. (2019), “Environmental Kuznets curve for CO2 emissions: a literature survey”, Journal of Economic Studies, Vol. 46 No. 1, pp. 106-168.

Song, Z. (2021), “Economic growth and carbon emissions: estimation of a panel threshold model for the transition process in China”, Journal of Cleaner Production, Vol. 278, p. 123773.

Spilker dkk. (2017). International Political Economy and the Environment. Oxford Research Encyclopedia.

Tenaw, D. dan Beyene, A. (2021). Environmental sustainability and economic development in sub-Saharan Africa: A modified EKC hypothesis. Renewable and Sustainable Energy Reviews, 143 (2021) 110897.

Tol, R.S.J. (2012). On the uncertainty about the total economic impact of climate change. Environmental and Resource Economics, 53, 97-116.

Umaroh, Rodhiah. (2019). Does Education Reduce CO2 Emissions? Empirical Evidence of The Environmental Kuznets Curve in Indonesia. Journal of Reviews on Global Economics, Vol. 8, 662-671.

Wang, Q. and Zhang, F. (2021), “The effects of trade openness on decoupling carbon emissions from economic growth – evidence from 182 countries”, Journal of Cleaner Production, Elsevier, Vol. 279, p. 123838.

WEF. (2017). Global Shapers Survey. Global Shapers Community. Retrieved from http:// www.shaperssurvey2017.org/static/data/ WEF_GSC_Annual_Survey_2017.pdf

Wen, H. and Dai, J. (2020), “Trade openness, environmental regulation, and human capital in China: based on ARDL cointegration and Granger causality analysis”, Environmental Science and Pollution Research, Vol. 27 No. 2, pp. 1789-1799.

Zafar, A., Ullah, S., Majeed, M.T. and Yasmeen, R. (2020), “Environmental pollution in Asian economies: does the industrialisation matter?”, OPEC Energy Review, Vol. 44 No. 3, pp. 227-248.

Zhang, Xin, Xiaobo Zhang, and Xi Chen. 2017. “Happiness in the air: how does a dirty sky affect mental health and subjective well-being?” Journal of environmental economics and management 85:81-94.

DOI: 10.23917/jep.v24i2.23191

Article Metrics

Abstract view(s): 126 time(s)
PDF: 87 time(s)

Refbacks

  • There are currently no refbacks.