Revisiting the Environmental Kuznets Curve: The Impact of Economic Growth and Trade Openness on CO2 Emissions in Southeast Asian Countries

Research purpose: This study aims to investigate the impact of economic growth and trade openness on CO2 emissions across eight Southeast Asian countries from 1990 to 2022. The non-linear impact was examined by testing the Environmental Kuznets Curve (EKC) hypothesis, seeking to determine whether rising income levels in the region eventually contribute to environmental improvement or exacerbate environmental pressures. Research motivation: As Southeast Asia has become one of the most vibrant regions in the world, it has also faced severe environmental problems. This has raised the concerns about sustainability and the nature of the relationship between economic growth and environmental improvement. Although the EKC hypothesis has been widely studied elsewhere, evidence from Southeast Asia remains limited and inconclusive. Therefore, it is necessary to explore whether countries in the region are in good bath ways to balance growth with environmental protection. Research design, approach, and method: The study employs annual data from 1990 to 2022 for eight Southeast Asian economies, utilizing panel regression models to assess both quadratic and cubic specifications of the Environmental Kuznets Curve (EKC). This method may identify nonlinear relationships between income growth and CO2 emissions, as well as demonstrate the impact of trade openness on these relationships. Separate country analyses are conducted to highlight differences in economic structures, policy settings, and development stages. Main findings: The findings reveal a mixed picture. While the EKC framework is confirmed in the cases of Thailand, Malaysia, Singapore, and Cambodia, showing a eventual decline in emissions beyond certain income thresholds, others, notably Vietnam and Brunei, do not follow this trajectory. The impact of trade openness on CO2 emissions also varies among the countries in Southeast Asia. Practical/managerial implications: The findings significantly impact both corporate executives and legislators. Governments emphasize the necessity of integrating sustainability into development plans by investing in renewable energy, enhancing energy efficiency, and enforcing environmental regulations more rigorously. For firms, the results emphasize green technology adoption as well as compliance with international sustainability standards.