The role of urbanization and industrialization in economic development in the East Asia region

The paper examines the effects of urbanization and industrialization on the carbon intensity of the GDP in the four East Asian selected economies; China, Japan, South Korea, and Mongolia between the period 1990 to 2023. The study is conducted using a panel dataset, utilizing a mixed fixed and random-effects model with the Hausman test to check the model; and panel ARDL estimation to investigate the short-run and long-run nature of the association between key variables; which are; carbon intensity, industrialization, urbanization, renewable energy consumption, human development index, and foreign direct investment. Unit root tests indicate that all variables are integrated of order one and cointegration tests obtain a long-run equilibrium relationship. Findings of the fixed effects model indicate that carbon intensity is decreased by renewable energy consumption, urbanization, and HDI and increased by FDI. The panel ARDL long-run findings confirmed that HDI and renewable energy contributed to a decrease in carbon intensity, whereas industrialization and FDI increased carbon intensity. The paper concludes that even though drivers of economic development affect environmental outcomes differently, human development and clean energy consumption are decisive factors in decreasing carbon intensity. This evidence points to the necessity of concerted policy responses to sustainable development in East Asia.