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Carbon dioxide emission, institutional quality, and economic growth: Empirical evidence in Malaysia

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  • Lau, Lin-Sea
  • Choong, Chee-Keong
  • Eng, Yoke-Kee

Abstract

In view of Malaysia's status as a fast-growing economy with accelerating carbon dioxide emissions, a better understanding of the relationship between economic growth and pollution is vital to the policy makers. This paper, therefore, attempts to investigate the existence of long run relationship among carbon dioxide emission, institutional quality, exports, and economic growth and further examines the causal relationship among these variables in Malaysia for the period 1984–2008. From the bounds test, it is found that a long run relationship does exist among the variables, even using different conditioning information sets. A positive and significant interaction term between carbon dioxide emission and institutional quality indicator (i.e. law and order) implies that good institutional quality is important in controlling carbon dioxide emission in the process of economic development. The results for Granger causality tests further confirm the importance of institutional frameworks in reducing carbon dioxide emissions since institutional quality is found not only affects economic growth directly, but also indirectly via carbon dioxide emissions. This indicates that sound institutional frameworks are essential for Malaysia to achieve high economic growth without sacrificing its environment.

Suggested Citation

  • Lau, Lin-Sea & Choong, Chee-Keong & Eng, Yoke-Kee, 2014. "Carbon dioxide emission, institutional quality, and economic growth: Empirical evidence in Malaysia," Renewable Energy, Elsevier, vol. 68(C), pages 276-281.
  • Handle: RePEc:eee:renene:v:68:y:2014:i:c:p:276-281
    DOI: 10.1016/j.renene.2014.02.013
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    Cited by:

    1. Omri, Anis, 2017. "Entrepreneurship, Sectoral Outputs and Environmental Improvement : International Evidence," MPRA Paper 82440, University Library of Munich, Germany.
    2. Omri, Anis, 2018. "Entrepreneurship, sectoral outputs and environmental improvement: International evidence," Technological Forecasting and Social Change, Elsevier, vol. 128(C), pages 46-55.
    3. Abid, Mehdi, 2016. "Impact of economic, financial, and institutional factors on CO2 emissions: Evidence from Sub-Saharan Africa economies," Utilities Policy, Elsevier, vol. 41(C), pages 85-94.
    4. repec:spr:envpol:v:19:y:2017:i:2:d:10.1007_s10018-016-0162-5 is not listed on IDEAS
    5. Brännlund Runar & Karimu Amin & Söderholm Patrik, 2017. "Convergence in carbon dioxide emissions and the role of growth and institutions: a parametric and non-parametric analysis," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(2), pages 359-390, April.
    6. Decai Tang & Tingyu Ma & Zhijiang Li & Jiexin Tang & Brandon J. Bethel, 2016. "Trend Prediction and Decomposed Driving Factors of Carbon Emissions in Jiangsu Province during 2015–2020," Sustainability, MDPI, Open Access Journal, vol. 8(10), pages 1-15, October.

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