The impact of macroeconomic indicators on carbon emission in Indonesia
DOI:
https://doi.org/10.22437/ppd.v10i1.17532Keywords:
CO2 emmisions, Foreign direct investment, Value-added manufactureAbstract
The advancement of the industrial sector in economic activities can negatively impact the environment. Inefficient use of natural resources causes environmental damage in almost all countries. Environmental damage caused by economic activities becomes a crucial issue. Hence, the main purpose of this research is to estimate the impacts of macroeconomic indicators on increasing CO2 emissions in Indonesia with time-series data from 1970 to 2016. The macroeconomic indicators used in this research were broad money, foreign direct investment, value-added manufacturing, and international trade. The analysis method was ARDL-ECM (Autoregressive Distributed Lag-Error Correction Model) for long-term and short-term analysis. The main findings in the long term value-added manufacturing and international trade have positive effects on the formation of CO2 emissions. In contrast, foreign direct investments have significant but negative effects at the 10% significance level of CO2 emissions. In the short term, only value-added manufacturing and international trade variables have significantly influenced the formation of CO2 emissions in Indonesia. In contrast, foreign direct investments have been proven to be insignificant. Broad money in both the long and short term is insignificant to CO2 emissions. Based on these findings and changing climatic conditions, it is necessary to have economic development policies that reduce emissions to preserve the environment and human civilization in the long term.
Downloads
References
Azwar. (2019). Economic Growth And Co2 Emissions In Indonesia : Investigating The Environmental Kuznets Curve Hypothesis Existence. Jurnal BPPK, 12, 42–52.
Bashir, A., Thamrin, K. M. H., Farhan, M., Mukhlis, M., & Atiyatna, D. P. (2019). The Causality between Human Capital, Energy Consumption, CO2 Emissions, and Economic Growth: Empirical Evidence from Indonesia. International Journal of Energy Economics and Policy, 9(2), 98–104.
Bimanatya, T.E. & Widodo, T. (2018). Fossil Fuels Consumption, Carbon Emissions, and Economic Growth in Indonesia. International Journal of Energy Economics and Policy, 4, 90–97.
Brock, W.A. & Taylor, M. (2004). Economic Growth And The Environment: A Review of Theory And Empirics. NBER Working Paper Series, Available at: http://www.nber.org/papers/w10854.
Bruce, Y.B., Bhattarai, M., & Vijayaraghavan, M. (2004). Environmental Kuznets Curves: A Review of Findings, Methods, and Policy Implications. IWMI Research Reports from International Water Management Institute. Available at: https://econpapers.repec.org/paper/iwtrerpts/h044740.htm
Chontanawat, J. (2020). Relationship between Energy Consumption, CO2 Emission and Economic Growth in ASEAN: Cointegration and Causality Model. Energy Reports 6, https://doi.org/10.1016/j.egyr.2019.09.046, 660–665.
Dasgupta, S., Laplante, B., Wang, H. & Wheeler, D. (. (2002). Confronting the Environmental Kuznets Curve. Journal of Economic Perspectives, 16, 147–168.
Hdom, H.A.D. & Fuinhas, J. A. (2020). Energy Production and Trade Openness: Assessing Economic Growth, CO2 Emissions and The Applicability of The Cointegration Analysis. Energy Strategy Reviews 30, https://doi.org/10.1016/j.esr.2020.100488.
Lim, K.M., Lim, S.Y., & Yoo, S. . (2014). Oil Consumption, CO2 Emission, and Economic Growth: Evidence from the Philippines. Sustainability, 6, 967–979. doi:10.3390/su6020967,
Nuansa, C.G., & Widodo, W. (2018). Environmental Kuznets Curve Hypothesis: A Perspective of Sustainable Development in Indonesia. E3s Web Of Conferences 31, https://doi.org/10.1051/e3sconf/20183109021.
Nugraha, A.T., & Osman, N. H. (2018). CO2 Emissions, Economic Growth, Energy Consumption, and Household Expenditures for Indonesia: Evidence from Cointegration and Vector Error Correction Model. International Journal of Energy Economics and Policy, 9(1), 291–298.
Pesaran, M.H., Shin, Y., & Smith, R. . (2001). Bounds Testing Approaches To The Analysis Of Level Relationships. Journal of Applied Econometrics, 3, 289–326.
Prawoto, N. & Basuki, A. T. (2020). Effect of Macroeconomic Indicators and CO2 Emission on Indonesian Economic Growth. International Journal of Energy Economics and Policy, 10(6), 354–358.
Shaharir, M. Z., & Alinor, M.A.K. (2013). The Need for a New Definition of Sustainability. Journal of Indonesian Economy and Business, 28(2), , 251–268.
Shahbaz, M., Nasir, M.A., Hille, E.& Mahalik, M.K. (2020). UK’s Net-Zero Carbon Emissions Target: Investigating the Potential Role of Economic Growth, Financial Development, and R&D Expenditures Based on Historical Data (1870-2017). Technological Forecasting & Social Change, 161, https://doi.org/10.1016/j.techfore.2020.120255.
Tong, T., Ortiz, J., Xu, C. & Li, F. (2020). Economic Growth, Energy Consumption, And Carbon Dioxide Emissions In The E7 Countries: A Bootstrap Ardl Bound Test. Energy, Sustainability and Society, 10, 20. https://doi.org/10.1186/s13705-020-00253-6.
Worldbank. (2021). World Bank Open Data. Available at: https://data.worldbank.org/.
Zubair, A. O., Samad, A. A., & Dankumo, A. M. (2020). Does Gross Domestic Income, Trade Integration, FDI Inflows, GDP, and Capital Reduces CO2 Emissions? An Empirical Evidence from Nigeria. Current Research in Environmental Sustainability, 2. doi.org/10.1016/j.crsust.2020.100009.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2022 Vita Kartika Sari
This work is licensed under a Creative Commons Attribution 4.0 International License.
