Shanty Oktavilia, - (2017) Environmental Degradation, Trade Openness, and Economic Growth in Southeast Asian Countries. Pertanika Journal of Social Sciences & Humanities, 25. pp. 175-186. ISSN 0128-7702

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Abstract

The trade-off between economic growth and environmental quality has long been debated. The aim of this study was to find out if the hypothesis of the Environmental Kuznets Curve (EKC) in five Southeast Asian countries - Indonesia, Malaysia, the Philippines, Singapore, and Thailand – is supported. This study analysed the effect of GDP per-capita and the ratio of trade openness on CO2 emissions. Using annual data from 1975 to 2014, this study employed the Error Correction Model (ECM) to test the EKC hypothesis for each country and applied the fixed effect panel data model to test the EKC hypothesis for all countries. The results showed that in the long run, the inverted U of the EKC hypothesis was supported in Singapore, without any turning point in Indonesia and in the Philippines, but no evidence was found for Malaysia and Thailand. Except for Singapore, trade liberalisation had positive effect on CO2 emissions. The results of panel data analysis indicated that, in general, the inverted U of the EKC hypothesis was supported in Southeast Asian countries, while trade liberalisation positively affected the increase of CO2 emissions.

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