Disclosing the Relationship among CO2 Emissions, Energy Consumption, Economic Growth and Bilateral Trade between Singapore and Malaysia: An Econometric Analysis
The aim of this paper is to examine the relationship among CO2 per capita emissions, energy consumption, economic growth and bilateral trade between Singapore and Malaysia for the 1970-2011 period. ARDL model and Granger causality tests are employed for the analysis. Results of bound F-statistics suggest that long-run relationship exists between CO2 per capita (PCO2) and its determinants. The EKC hypothesis is not supported in Malaysia. Carbon emissions are mainly determined by energy consumption in the short and long run. While, exports to Singapore is a significant variable in explaining PCO2 emissions in Malaysia in long-run. Furthermore, we find a unidirectional causal relationship running from economic growth to PCO2 emissions.
[1] Intergovernmental Panel on Climate Change (IPCC), “Managing the
Risks of Extreme Events and Disasters to Advance Climate Change
Adaptation”, Cambridge University Press, Cambridge, UK, 2012.
[2] DOHA, “UN Climate Change Conference COP18-CMP8”. 2012,
Retrieved from (http://unfccc.int/key_steps/doha_climate_gateway).
[3] Tenth Malaysia Plan, 2011-2015. Putrajaya, Malaysia: The Economic
Planning Unit, Prime Minister’s Department; 2010.
[4] World Bank Indicators (2013), retrieved from:
http://data.worldbank.org/country/malaysia (accessed on January 2013).
[5] Energy Information Administration (EIA), “International Energy Annual
Report 2005 – CO2 World Carbon Dioxide Emissions from the
Consumption of Coal”, 2005, USA: Government of US. Retrieved from
http://www.eia.doe.gov.
[6] B. Liebman, “Malaysia leads the world in greenhouse gas emission
growth rate”, Curb Global Warming, 2007, Retreived from:
http://curbglobalwarmingblog.Blogspot.com.
[7] J. Burck, C. Bals, and K. Bohnenberger, “ Climate Change Performance
Index 2012”, Berlin, Germany, Available at: (www.germanwatch.org/
ccpi).
[8] M. B. Yusoff, “Malaysian Bilateral Trade Relations and Economic
Growth”, International Journal of Business and Society, vol. 6, 2005,
pp. 55-68.
[9] Department of Statistics Malaysia (DOSM), Malaysia External Trade
Statistics, 2012, Retrieved from: http://www.statistics.gov.my/portal
(accessed on March 2013).
[10] B. Saboori, J. Sulaiman, and S. Mohd, “Economic growth and CO2
emissions in Malaysia: A cointegration analysis of the Environmental
Kuznets Curve”, Energy Policy, vol. 51, 2012, pp. 184–191.
[11] S. Kuznets, “Economic growth and income inequality”, American
Economic Review, vol. 45, 1995, pp. 1–28,.
[12] U. Soytas, and R. Sari, “Energy consumption and GDP: causality
relationship in G-7 countries and emerging markets”, Energy
Economics, vol. 25, 2003, pp. 33–37.
[13] J. B. Ang, “Economic development, pollutant emissions and energy
consumption in Malaysia”, Journal of Policy Modeling, vol. 30, 2008,
pp. 271–278.
[14] C. C. Lee and J. D. Lee, “Income and CO2 emissions: evidence from
panel unit root and cointegration tests”, Energy Policy, vol. 37, 2009, pp.
413-423.
[15] P. K. Narayan, and S. Narayan, “Carbon dioxide emissions and
economic growth: Panel data evidence from developing countries”,
Energy Policy, vol. 38, 2010, pp. 661-666.
[16] I. Ozturk, and A. Acaravci, “CO2 emissions, energy consumption and
economic growth in Turkey’, Renewable and Sustainable Energy
Reviews, vol. 14, 2010, pp. 3220–3225.
[17] S. S. Wang, D. Q. Zhou, P. Zhou and Q. W. Wang, “CO2 emissions,
energy consumption and economic growth in China: A panel data
analysis”, Energy Policy, vol. 39, 2011, pp. 4870–4875.
[18] M. J. Alam, I. A. Begum, J. Buysse, S. Rahman, and G. V.
Huylenbroeck, “Dynamic modeling of causal relationship between
energy consumption, CO2 emissions and economic growth in India”,
Renewable and Sustainable Energy Review, vol. 15, 2011, pp. 3243-
3251.
[19] H. A. Bekhet, and T. Yasmin, “Exploring EKC, trends of growth
patterns and air pollutants concentration level in Malaysia: A Nemerow
Index Approach”, IOP Conf. Series: Earth and Environmental Science,
vol. 16, 2013, pp. 1-4.
[20] H.A. Bekhet, and T. Yasmin,“ Economic Growth and Pollutant
Emission In Malaysia: An Empirical Analysis of Environmental Kuznets
Curve”, 16th AFBE Conf., Putrajaya, Malaysia, 2012, pp. 370-387.
[21] J. Kraft, and A. Kraft, “On the relationship between energy and GNP”,
Journal of Energy Development, vol. 3, 1978, pp. 401–403. [22] A. M. M. Masih, and R. Masih, “On temporal causal relationship
between energy consumption, real income and prices: some new
evidence from Asian energy dependent NICs based on a multivariate
cointegration vector error correction approach”, Journal of Policy
Modeling, vol. 19, 1997, pp. 417–440.
[23] A. Aqeel, and M. S. Butt, “The relationship between energy
consumption and economic growth in Pakistan”, Journal of Asia Pacific
Development, vol. 8, 2001, pp. 101–110.
[24] U. Soytas, and R. Sari, “Energy consumption, economic growth, and
carbon emissions: challenges faced by an EU candidate member”,
Ecological Economics, vol. 68, 2009, pp. 1667-1675.
[25] Wolde-Rufael, “Electricity consumption and economic growth: a time
series experience for 17 African countries”, Energy Policy, vol. 34,
2006, pp. 1106–1114.
[26] M. Al-Iriani, “Energy–GDP relationship revisited: an example from
GCC countries using panel causality”, Energy Policy, vol. 34, 2006, pp.
3342–3350.
[27] D. B. Reynolds and M. Kolodziej, “Former Soviet Union oil production
and GDP decline: granger causality and the multi-cycle Hubbert curve”,
Energy Economics, vol. 30, 2008, , pp. 271–289.
[28] V. G. R. Chandran, S. Sharma, and K. Madhavan, “Electricity
consumption–growth nexus: the case of Malaysia”, Energy, vol. 38,
2009, pp. 606–612.
[29] F. Islam, M. Shahbaz, A. U. Ahmed, and M. M. Alam, “Financial
development and energy consumption nexus in Malaysia: A multivariate
time series analysis”, Economic Modelling, vol. 30, 2013, , pp. 435–441.
[30] H. Yoo, and S. Y. Kwak, “Electricity consumption and economic growth
in seven South American countries”, Energy Policy, vol. 38, 2010, pp.
181–188.
[31] M. Shahbaz, H. H. Lean, and M. S. Shabbir, “Environmental Kuznets
Curve hypothesis in Pakistan: Co integration and Granger causality”,
Renewable and Sustainable Energy Reviews, vol. 16, 2012, pp. 2947–
2953.
[32] M. Feridun, F. S. Ayadi, and J. Balouga, “Impact of trade liberalization
on the environment in developing countries: the case of Nigeria”,
Journal of Developing Societies, vol. 22, 2006, pp. 39–56.
[33] W. Antweiler, R. B. Copeland and M. S. Taylor, “Is free trade good for
the emissions: 1950–2050”, The Review of Economics and Statistics,
vol. 80, 2001, pp. 15–27.
[34] S. Khalil and Z. Inam, “Is trade good for environment? a unit root co
integration analysis?”, The Pakistan Development Review, vol. 45, 2006,
pp. 1187-1196.
[35] F. Halicioglu, “An econometric study of CO2 emissions, energy
consumption, income and foreign trade in Turkey”, Energy Policy, vol.
37, 2009, pp. 1156–1164.
[36] A. Jalil, and S. F. Mahmud, “Environment Kuznets curve for CO2
emissions: A co integration analysis for China”, Energy Policy, vol. 37,
2009, pp. 5167–5172.
[37] United Nations Commodity Trade Statistics Database (2013), retrieved
from: http://comtrade.un.org/db/ (accessed on February 2013).
[38] S. Dinda, “Environmental Kuznets curve hypothesis: a survey”,
Ecological Economics, vol. 49, 2004, pp. 431–455.
[39] J. B. Ang, “CO2 emissions, energy consumption, and output in France”,
Energy Policy, vol. 35, 2007, pp. 4772-4778.
[40] H. Iwata, K. Okada, and S. Samreth, “Empirical study on environmental
Kuznets curve for CO2 in France: the role of nuclear energy”, Energy
Policy, vol.38, 2010, pp. 4057-4063.
[41] G. M. Grossman, and E. Helpman, “The politics of free-trade
agreements”, American Economic Review, vol. 85, 1995, pp. 667-690.
[42] R. F. Engle, and C. W. J. Granger, “Co-integration and error-correction:
representation, estimation and testing”, Econometrica, vol. 55, 1987, pp.
251-276.
[43] S. Johansen, and K. Juselius, “Maximum likelihood estimation and
inference on cointegration with applications to the demand for money”,
Oxford Bulletin of Economics and Statistics, vol. 52, 1990, pp. 169-210.
[44] P. Phillips, and B. Hansen,“Statistical inference in instrumental variables
regression with I(1) process”, Reviewof Economic Studies, vol. 57, 1990,
pp. 99-125.
[45] M. H. Pesaran, Y. Shin, and R. J. Smith, “Bound testing approaches to
the analysis of level relationship”, Journal of Applied Econometrics, vol.
16, 2001, pp. 289-326.
[46] M. H. Pesaran, and Y. Shin, “An autoregressive distributed lag modeling
approach to cointegration analysis”, In:Strom, S. (Ed.), Econometrics
and Economic Theory in 20th Century: The Ragnar Frisch Centennial
Symposium.Cambridge University Press, Cambridge, 1999, Chapter 11 .
[47] C. Brooks, “Introductory Econometrics for Finance”, 2nd Edition,
Cambridge University Press, 2008, Chapter 3.
[48] D. Gujarati, and D. Porter, Basic Econometrics. New York, NY:
McGraw-Hill Irwin, 2009, Chapter 7.
[49] C. W. Granger, “Some properties of time series data and their use in
econometric model specification”, Journal of econometrics, vol. 16,
1981, pp. 121-130.
[50] M. Fodha, and O. Zaghdoud, “Economic growth and pollutant emissions
in Tunisia: an empirical analysis of the Environmental Kuznets Curve”,
Energy Policy, vol. 38, 2010, pp. 1150–1156.
[51] M. R. Lotfalipour, M. A. Falahi, and M. Ashena, “Economic growth,
CO2 emissions, and fossil fuels consumption in Iran”, Energy, vol. 35,
2010, pp. 5115–5120.
[52] M. Nasir, and F. Rehman, “Environmental Kuznets Curve for carbon
emissions in Pakistan: an empirical investigation’, Energy Policy, vol.
39, 2011, pp. 1857–1864.
[1] Intergovernmental Panel on Climate Change (IPCC), “Managing the
Risks of Extreme Events and Disasters to Advance Climate Change
Adaptation”, Cambridge University Press, Cambridge, UK, 2012.
[2] DOHA, “UN Climate Change Conference COP18-CMP8”. 2012,
Retrieved from (http://unfccc.int/key_steps/doha_climate_gateway).
[3] Tenth Malaysia Plan, 2011-2015. Putrajaya, Malaysia: The Economic
Planning Unit, Prime Minister’s Department; 2010.
[4] World Bank Indicators (2013), retrieved from:
http://data.worldbank.org/country/malaysia (accessed on January 2013).
[5] Energy Information Administration (EIA), “International Energy Annual
Report 2005 – CO2 World Carbon Dioxide Emissions from the
Consumption of Coal”, 2005, USA: Government of US. Retrieved from
http://www.eia.doe.gov.
[6] B. Liebman, “Malaysia leads the world in greenhouse gas emission
growth rate”, Curb Global Warming, 2007, Retreived from:
http://curbglobalwarmingblog.Blogspot.com.
[7] J. Burck, C. Bals, and K. Bohnenberger, “ Climate Change Performance
Index 2012”, Berlin, Germany, Available at: (www.germanwatch.org/
ccpi).
[8] M. B. Yusoff, “Malaysian Bilateral Trade Relations and Economic
Growth”, International Journal of Business and Society, vol. 6, 2005,
pp. 55-68.
[9] Department of Statistics Malaysia (DOSM), Malaysia External Trade
Statistics, 2012, Retrieved from: http://www.statistics.gov.my/portal
(accessed on March 2013).
[10] B. Saboori, J. Sulaiman, and S. Mohd, “Economic growth and CO2
emissions in Malaysia: A cointegration analysis of the Environmental
Kuznets Curve”, Energy Policy, vol. 51, 2012, pp. 184–191.
[11] S. Kuznets, “Economic growth and income inequality”, American
Economic Review, vol. 45, 1995, pp. 1–28,.
[12] U. Soytas, and R. Sari, “Energy consumption and GDP: causality
relationship in G-7 countries and emerging markets”, Energy
Economics, vol. 25, 2003, pp. 33–37.
[13] J. B. Ang, “Economic development, pollutant emissions and energy
consumption in Malaysia”, Journal of Policy Modeling, vol. 30, 2008,
pp. 271–278.
[14] C. C. Lee and J. D. Lee, “Income and CO2 emissions: evidence from
panel unit root and cointegration tests”, Energy Policy, vol. 37, 2009, pp.
413-423.
[15] P. K. Narayan, and S. Narayan, “Carbon dioxide emissions and
economic growth: Panel data evidence from developing countries”,
Energy Policy, vol. 38, 2010, pp. 661-666.
[16] I. Ozturk, and A. Acaravci, “CO2 emissions, energy consumption and
economic growth in Turkey’, Renewable and Sustainable Energy
Reviews, vol. 14, 2010, pp. 3220–3225.
[17] S. S. Wang, D. Q. Zhou, P. Zhou and Q. W. Wang, “CO2 emissions,
energy consumption and economic growth in China: A panel data
analysis”, Energy Policy, vol. 39, 2011, pp. 4870–4875.
[18] M. J. Alam, I. A. Begum, J. Buysse, S. Rahman, and G. V.
Huylenbroeck, “Dynamic modeling of causal relationship between
energy consumption, CO2 emissions and economic growth in India”,
Renewable and Sustainable Energy Review, vol. 15, 2011, pp. 3243-
3251.
[19] H. A. Bekhet, and T. Yasmin, “Exploring EKC, trends of growth
patterns and air pollutants concentration level in Malaysia: A Nemerow
Index Approach”, IOP Conf. Series: Earth and Environmental Science,
vol. 16, 2013, pp. 1-4.
[20] H.A. Bekhet, and T. Yasmin,“ Economic Growth and Pollutant
Emission In Malaysia: An Empirical Analysis of Environmental Kuznets
Curve”, 16th AFBE Conf., Putrajaya, Malaysia, 2012, pp. 370-387.
[21] J. Kraft, and A. Kraft, “On the relationship between energy and GNP”,
Journal of Energy Development, vol. 3, 1978, pp. 401–403. [22] A. M. M. Masih, and R. Masih, “On temporal causal relationship
between energy consumption, real income and prices: some new
evidence from Asian energy dependent NICs based on a multivariate
cointegration vector error correction approach”, Journal of Policy
Modeling, vol. 19, 1997, pp. 417–440.
[23] A. Aqeel, and M. S. Butt, “The relationship between energy
consumption and economic growth in Pakistan”, Journal of Asia Pacific
Development, vol. 8, 2001, pp. 101–110.
[24] U. Soytas, and R. Sari, “Energy consumption, economic growth, and
carbon emissions: challenges faced by an EU candidate member”,
Ecological Economics, vol. 68, 2009, pp. 1667-1675.
[25] Wolde-Rufael, “Electricity consumption and economic growth: a time
series experience for 17 African countries”, Energy Policy, vol. 34,
2006, pp. 1106–1114.
[26] M. Al-Iriani, “Energy–GDP relationship revisited: an example from
GCC countries using panel causality”, Energy Policy, vol. 34, 2006, pp.
3342–3350.
[27] D. B. Reynolds and M. Kolodziej, “Former Soviet Union oil production
and GDP decline: granger causality and the multi-cycle Hubbert curve”,
Energy Economics, vol. 30, 2008, , pp. 271–289.
[28] V. G. R. Chandran, S. Sharma, and K. Madhavan, “Electricity
consumption–growth nexus: the case of Malaysia”, Energy, vol. 38,
2009, pp. 606–612.
[29] F. Islam, M. Shahbaz, A. U. Ahmed, and M. M. Alam, “Financial
development and energy consumption nexus in Malaysia: A multivariate
time series analysis”, Economic Modelling, vol. 30, 2013, , pp. 435–441.
[30] H. Yoo, and S. Y. Kwak, “Electricity consumption and economic growth
in seven South American countries”, Energy Policy, vol. 38, 2010, pp.
181–188.
[31] M. Shahbaz, H. H. Lean, and M. S. Shabbir, “Environmental Kuznets
Curve hypothesis in Pakistan: Co integration and Granger causality”,
Renewable and Sustainable Energy Reviews, vol. 16, 2012, pp. 2947–
2953.
[32] M. Feridun, F. S. Ayadi, and J. Balouga, “Impact of trade liberalization
on the environment in developing countries: the case of Nigeria”,
Journal of Developing Societies, vol. 22, 2006, pp. 39–56.
[33] W. Antweiler, R. B. Copeland and M. S. Taylor, “Is free trade good for
the emissions: 1950–2050”, The Review of Economics and Statistics,
vol. 80, 2001, pp. 15–27.
[34] S. Khalil and Z. Inam, “Is trade good for environment? a unit root co
integration analysis?”, The Pakistan Development Review, vol. 45, 2006,
pp. 1187-1196.
[35] F. Halicioglu, “An econometric study of CO2 emissions, energy
consumption, income and foreign trade in Turkey”, Energy Policy, vol.
37, 2009, pp. 1156–1164.
[36] A. Jalil, and S. F. Mahmud, “Environment Kuznets curve for CO2
emissions: A co integration analysis for China”, Energy Policy, vol. 37,
2009, pp. 5167–5172.
[37] United Nations Commodity Trade Statistics Database (2013), retrieved
from: http://comtrade.un.org/db/ (accessed on February 2013).
[38] S. Dinda, “Environmental Kuznets curve hypothesis: a survey”,
Ecological Economics, vol. 49, 2004, pp. 431–455.
[39] J. B. Ang, “CO2 emissions, energy consumption, and output in France”,
Energy Policy, vol. 35, 2007, pp. 4772-4778.
[40] H. Iwata, K. Okada, and S. Samreth, “Empirical study on environmental
Kuznets curve for CO2 in France: the role of nuclear energy”, Energy
Policy, vol.38, 2010, pp. 4057-4063.
[41] G. M. Grossman, and E. Helpman, “The politics of free-trade
agreements”, American Economic Review, vol. 85, 1995, pp. 667-690.
[42] R. F. Engle, and C. W. J. Granger, “Co-integration and error-correction:
representation, estimation and testing”, Econometrica, vol. 55, 1987, pp.
251-276.
[43] S. Johansen, and K. Juselius, “Maximum likelihood estimation and
inference on cointegration with applications to the demand for money”,
Oxford Bulletin of Economics and Statistics, vol. 52, 1990, pp. 169-210.
[44] P. Phillips, and B. Hansen,“Statistical inference in instrumental variables
regression with I(1) process”, Reviewof Economic Studies, vol. 57, 1990,
pp. 99-125.
[45] M. H. Pesaran, Y. Shin, and R. J. Smith, “Bound testing approaches to
the analysis of level relationship”, Journal of Applied Econometrics, vol.
16, 2001, pp. 289-326.
[46] M. H. Pesaran, and Y. Shin, “An autoregressive distributed lag modeling
approach to cointegration analysis”, In:Strom, S. (Ed.), Econometrics
and Economic Theory in 20th Century: The Ragnar Frisch Centennial
Symposium.Cambridge University Press, Cambridge, 1999, Chapter 11 .
[47] C. Brooks, “Introductory Econometrics for Finance”, 2nd Edition,
Cambridge University Press, 2008, Chapter 3.
[48] D. Gujarati, and D. Porter, Basic Econometrics. New York, NY:
McGraw-Hill Irwin, 2009, Chapter 7.
[49] C. W. Granger, “Some properties of time series data and their use in
econometric model specification”, Journal of econometrics, vol. 16,
1981, pp. 121-130.
[50] M. Fodha, and O. Zaghdoud, “Economic growth and pollutant emissions
in Tunisia: an empirical analysis of the Environmental Kuznets Curve”,
Energy Policy, vol. 38, 2010, pp. 1150–1156.
[51] M. R. Lotfalipour, M. A. Falahi, and M. Ashena, “Economic growth,
CO2 emissions, and fossil fuels consumption in Iran”, Energy, vol. 35,
2010, pp. 5115–5120.
[52] M. Nasir, and F. Rehman, “Environmental Kuznets Curve for carbon
emissions in Pakistan: an empirical investigation’, Energy Policy, vol.
39, 2011, pp. 1857–1864.
@article{"International Journal of Business, Human and Social Sciences:65029", author = "H. A. Bekhet and T. Yasmin", title = "Disclosing the Relationship among CO2 Emissions, Energy Consumption, Economic Growth and Bilateral Trade between Singapore and Malaysia: An Econometric Analysis", abstract = "The aim of this paper is to examine the relationship among CO2 per capita emissions, energy consumption, economic growth and bilateral trade between Singapore and Malaysia for the 1970-2011 period. ARDL model and Granger causality tests are employed for the analysis. Results of bound F-statistics suggest that long-run relationship exists between CO2 per capita (PCO2) and its determinants. The EKC hypothesis is not supported in Malaysia. Carbon emissions are mainly determined by energy consumption in the short and long run. While, exports to Singapore is a significant variable in explaining PCO2 emissions in Malaysia in long-run. Furthermore, we find a unidirectional causal relationship running from economic growth to PCO2 emissions.
", keywords = "ADRL Bound Test, Bilateral trade, CO2 emission, Environmental Kuznets Curve, Energy consumption, Malaysia.", volume = "7", number = "9", pages = "2541-6", }
