The determinates of carbon emission intensity on socio-economic indicators : a causal analysis in the ASEAN region

Abstract

The rapid economic growth experienced by the Association of Southeast Asian Nations (ASEAN) in recent decades has led to a significant increase in carbon emissions, exacerbating the global challenge of climate change. Despite the urgency of addressing this issue, there is a lack of comprehensive research examining the factors driving the rise in carbon emission intensity within the ASEAN region. As the world's third-largest emitter of greenhouse gases, it is imperative to understand the relationship between economic development, social development, technological development, and carbon emission intensity to inform effective policy development. This study aims to fill the research gap by investigating the determinants of carbon emission intensity in ASEAN and exploring the impact of economic development, social development, and technological development on this intensity. By utilizing quarterly panel data comprising 432 observations from 10 ASEAN countries spanning the period from 2010 to 2021, a fixed-effect model (FEM) is employed as the estimation approaches in EViews. Prior to estimation, the validity and reliability of the model are assessed through the Chow test, Hausman test, and Laggrange Multiplier test. Additionally, tests for multicollinearity and heteroscedasticity are conducted. The study reveals that among the examined variables, only foreign direct investment (FDI) from the economic development indicators does not exhibit a significant association with carbon emission intensity. Conversely, higher GDP, lower inflation rates, and limited technological development are found to be significantly linked to lower carbon emission intensity within the ASEAN region. Furthermore, two variables related to social development, namely the Human Development Index (HDI) and the GINI index, also do not demonstrate a significant relationship with carbon emission intensity. After applying the Granger causality test, the study reveals no significant mutual association between socioeconomic factors and carbon emission intensity. By addressing the critical research gap regarding the drivers of carbon emission intensity in ASEAN, this study has significant implications for policymakers and stakeholders. The findings provide valuable insights into the key factors influencing carbon emissions and offer evidence-based recommendations for the formulation of effective environmental policies.