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Reinvestigating the Presence of Environmental Kuznets Curve in Malaysia: The Role of Foreign Direct Investment

Author

Listed:
  • Abdul Rahim Ridzuan

    (Faculty of Business and Management, Universiti Teknologi MARA, Malaysia; Institute for Research on Socio Economic Policy, Universiti Teknologi MARA, Malaysia; Institute for Big Data Analytics and Artificial Intelligence, Universiti Teknologi MARA, Malaysia; and Accounting Research Institute, Universiti Teknologi MARA, Malaysia.)

  • Vikniswari Vija Kumaran

    (Faculty of Business and Finance, Universiti Tunku Abdul Rahman, Petaling Jaya, Malaysia,)

  • Bayu Arie Fianto

    (Faculty of Economics and Business, Universitas Airlangga, Surabaya, Indonesia,)

  • Mohd Shahidan Shaari

    (Faculty of Applied and Human Science, Universiti Malaysia Perlis, Arau, Malaysia,)

  • Miguel Angel Esquivias

    (Faculty of Economics and Business, Universitas Airlangga, Surabaya, Indonesia,)

  • Aliashim Albani

    (Renewable Energy and Power Research Interest Group, Faculty of Ocean Engineering Technology and Informatics, Universiti Malaysia Terengganu, Kuala Nerus, Terengganu, Malaysia.)

Abstract

Over the past forty years, Malaysia has achieved tremendous economic growth because of higher investment from foreigner such as from China, Japan, and US. Many multinational companies (MNC) have allocated their factories especially in more developed state such as Selangor, Penang and Johor to focused on their operation. The country able to receive various benefits from this investment in the form of job creation, advancement in technology, better income distribution and at same time, some negative externalities such as environmental degradation can also take place from those operation. Given this situation, it is interesting to investigate the current state of sustainable development for Malaysia by considering the impacts of FDI. This paper focused on investigating the presence of Environmental Kuznets Curve (EKC) as well as Pollution Haven Hypothesis (PHH) for Malaysia using a latest annual dataset for the period 1971 until 2019. The study used Bound test to determine the impact of FDI and other selected macroeconomic variables on environmental quality proxied by Carbon emission (CO2). The outcomes shows that the country showcased the U shaped of EKC and higher FDI inflows has worsening the country s environmental pollution. These outcomes posit a bad alarm for the policymakers of the country to be more aware on the consequences of development that cause higher carbon emissions release and how MNC in the country contribute more emissions with make the scenario worsen. Heavy environmental rules should be imposed to foreign investors and the country need to be directing their economic development by following the principles set out by United Nation in pursing sustainable development.

Suggested Citation

  • Abdul Rahim Ridzuan & Vikniswari Vija Kumaran & Bayu Arie Fianto & Mohd Shahidan Shaari & Miguel Angel Esquivias & Aliashim Albani, 2022. "Reinvestigating the Presence of Environmental Kuznets Curve in Malaysia: The Role of Foreign Direct Investment," International Journal of Energy Economics and Policy, Econjournals, vol. 12(5), pages 217-225, September.
    • Handle: RePEc:eco:journ2:2022-05-26
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    References listed on IDEAS

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    Cited by:

    1. Nora Yusma Mohamed Yusoff & Abdul Rahim Ridzuan & Thomas Soseco & Wahjoedi & Bagus Shandy Narmaditya & Lim Chee Ann, 2023. "Comprehensive Outlook on Macroeconomic Determinants for Renewable Energy in Malaysia," Sustainability, MDPI, vol. 15(5), pages 1-15, February.
    2. Liton Chandra Voumik & Md. Azharul Islam & Samrat Ray & Nora Yusma Mohamed Yusop & Abdul Rahim Ridzuan, 2023. "CO 2 Emissions from Renewable and Non-Renewable Electricity Generation Sources in the G7 Countries: Static and Dynamic Panel Assessment," Energies, MDPI, vol. 16(3), pages 1-14, January.
    3. Halimahton Borhan & Abdul Rahim Ridzuan & Mohamad Idham Md Razak & Rozita Naina Mohamed, 2023. "The Dynamic Relationship between Energy Consumption and Level of Unemployment Rates in Malaysia: A Time Series Analysis Based on ARDL Estimation," International Journal of Energy Economics and Policy, Econjournals, vol. 13(2), pages 207-214, March.
    4. Liton Chandra Voumik & Md. Hasanur Rahman & Shohel Md. Nafi & Md. Akter Hossain & Abdul Rahim Ridzuan & Nora Yusma Mohamed Yusoff, 2023. "Modelling Sustainable Non-Renewable and Renewable Energy Based on the EKC Hypothesis for Africa’s Ten Most Popular Tourist Destinations," Sustainability, MDPI, vol. 15(5), pages 1-19, February.

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    More about this item

    Keywords

    Environmental Kuznets Curve; Pollution Haven Hypothesis; Sustainable Energy; Energy Consumption; Sustainable Economic Growth; Sustainable Infrastructure;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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