The Impact of Industrialization on CO2 Emissions in Some selected Asian Countries: A Panel Data Analysis

Abstract

In recent years, environmental degradation has been the primary source of concern for all countries, especially the industrialized ones. To determine the comprehensive impact of industrialization measured through a share of industry (including manufacturing) as a percentage of GDP in addition to Foreign direct investment (FDI), Trade openness (TO), Gross domestic product per capita (GDPPC), and Oil consumption (OIL) on environmental degradation as measured by CO2 emissions, this study used panel data of seven Asian countries from 1990 to 2021 and estimated several models, including a fixed effects model with cross-section weights and an autoregressive distributed lag (ARDL) model. The findings revealed GDPPC, OIL and TO have a positive relation with CO2 emission in the long run, INDUS and FDI have a negative and insignificant relation with CO2 emissions respectively, while GDPPC2 has a negative relation with CO2 emissions. Most of the results of the long-run ARDL coefficients were similar to the fixed effects model with the exception of the coefficient of industrialization. This study also concludes that the environment Kuznets curve (EKC) and pollution paradise (PH) hypotheses are supported in the selected Asian nations. The key to assuring the quality of the environment, this study concludes, would be the strict implementation of environmental guidelines or the adoption of a new policies for increasing production capacity and trade liberalization at a safe CO2 emission level. Economic expansion is fueled by manufacturing and industrial production, but our study has proved that the impact of oil on CO2 emissions is much stronger than industrialization. To reduce CO2 emission, national policies should be established to identify alternative energy sources, while developing nations should employ clean and ecologically beneficial technologies, and government should increase funding for research and collaborate