Investments, Economics, Renewables and Population Versus Carbon Emissions in ASEAN and Larger Asian Countries: China, India and Pakistan

Simona-Vasilica Oprea, Adela Bâra and Irina Alexandra Georgescu ()
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Simona-Vasilica Oprea: Department of Economic Informatics and Cybernetics, Bucharest University of Economic Studies, No. 6 Piaţa Romană, 010374 Bucharest, Romania
Adela Bâra: Department of Economic Informatics and Cybernetics, Bucharest University of Economic Studies, No. 6 Piaţa Romană, 010374 Bucharest, Romania
Irina Alexandra Georgescu: Department of Economic Informatics and Cybernetics, Bucharest University of Economic Studies, No. 6 Piaţa Romană, 010374 Bucharest, Romania

Sustainability, 2025, vol. 17, issue 14, 1-31

Abstract: Our research explores the dynamic relationship between CO 2 emissions and four major influencing factors: foreign direct investment (FDI), economic growth (GDP), renewable energy consumption (REN) and population (POP) in the Association of Southeast Asian Nations (ASEAN) and three large Asian countries—China, India and Pakistan, collectively referred to as LACs (larger Asian countries), from 1990 to 2022. The study has three main objectives: (1) to assess the short-run and long-run effects of GDP, FDI, REN and POP on CO 2 emissions; (2) to compare the adjustment speeds and environmental policy responsiveness between ASEAN and LAC regions; and (3) to evaluate the role of renewable energy in mitigating environmental degradation. Against the backdrop of increasing environmental challenges and divergent development paths in Asia, this research contributes to the literature by applying a dynamic heterogeneous panel autoregressive distributed lag (panel ARDL) model. Unlike traditional static panel models, the panel ARDL model captures both long-run equilibrium relationships and short-run adjustments, allowing for country-specific dynamics. The results reveal a significant long-run cointegration among the variables. The error correction term (ECT) indicates a faster adjustment to equilibrium in LACs (−1.18) than ASEAN (−0.37), suggesting LACs respond more swiftly to long-run disequilibria in emissions-related dynamics. This may reflect more responsive policy mechanisms, stronger institutional capacities or more aggressive environmental interventions in LACs. In contrast, the slower adjustment in ASEAN highlights potential structural rigidities or delays in implementing effective policy responses, emphasizing the need for enhanced regulatory frameworks and targeted climate strategies to improve policy intervention efficiency. Results show that GDP and FDI increase emissions in both regions, while REN reduces them. POP is insignificant in ASEAN but increases emissions in LACs. These results provide insights into the relative effectiveness of policy instruments in accelerating the transition to a low-carbon economy, highlighting the need for differentiated strategies that align with each country’s institutional capacity, development stage and energy structure.

Keywords: renewables; FDI; ASEAN; panel ARDL; CO 2 emissions; economic growth; policy intervention efficiency (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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