Do technology and structural changes favour environment in Malaysia: an ARDL-based evidence for environmental Kuznets curve

Wajahat Ali (), Inam Ur Rahman (), Muhammad Zahid (), Muhammad Anees Khan () and Tafazal Kumail ()
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Wajahat Ali: Sarhad University of Science and Information Technology
Inam Ur Rahman: Sarhad University of Science and Information Technology
Muhammad Zahid: City University of Science and IT
Muhammad Anees Khan: Bahria University
Tafazal Kumail: Guangxi University of Finance and Economics

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2020, vol. 22, issue 8, No 36, 7927-7950

Abstract: Abstract The current study is an effort to investigate the relationship between technological innovation, structural changes, and carbon dioxide emission (CO2) along with the energy use and economic growth in the context of environmental Kuznets curve (EKC) over a period from 1985 to 2016. The study adopted the Zivot Andrews unit root test to check for the level of stationarity of the study variables. Based on the stationarity level, the study adopted autoregressive distributed lag (ARDL) approach to cointegration to investigate the presence of long- and short-run associations, simultaneously. To confirm the outcome of the ARDL bounds test in the presence of structural breaks, the study further applied the Gregory Hansen test of cointegration. The results reveal that industry value added in Malaysia has no significant impact on CO2 emissions. The results further posit that improvement in technology can lead to a cleaner environment. Regardless of improvements in technology and insignificant pressure of industrial activities towards environment, the results are not in the favour of the EKC hypothesis neither under the conventional turning point formula nor under the new turning point formula. The results reveal that long-run CO2 emission is bidirectionally related to energy use, structural changes, and technological innovation. The short-run results indicate bidirectional causalities between energy consumption, structural change, and CO2 emissions. The study suggests that the government should overhaul the structure of the energy in Malaysia to overcome both the losses in the production process and to reduce carbon emissions by inspiring the induction of environment-friendly and efficient technologies in the production process and a shift towards more services sector economy. The outcomes of the study are according to the theory of ecological modernization.

Keywords: CO2 emissions; EKC; Technological innovation; Structural change (search for similar items in EconPapers)
JEL-codes: L16 Q55 Q56 Q59 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (13)

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DOI: 10.1007/s10668-019-00554-7

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