Environmental pollution in Asian economies: Does the industrialisation matter?

• DOI: http://doi.org/10.1111/opec.12181
• Date: 01 September 2020
• Published date: 01 September 2020
• Author: Muhammad Tariq Majeed,Sana Ullah,Rizwana Yasmeen,Ayaz Zafar

Environmental pollution in Asian

economies: Does the industrialisation

matter?

Ayaz Zafar*, Sana Ullah* , Muhammad Tariq Majeed* and Rizwana

Yasmeen**

*School of Economics, Quaid-i-Azam University, Islamabad, Pakistan. Email: ayazzafar121@gmail.com

Email: sana_ullah133@yahoo.com Email: tariq@qau.edu.pk

**School of International Business, Southwestern University of Finance and Economics, Chengdu, China.

Email: rizwana_239@yahoo.com

Abstract

Industrialisation is a significant part of any country’s economic development. This study discusses

the relationship between industrialisation and carbon dioxide emissions for Asian economies. The

industrialisation has a major impact on carbon emissions, but its relationship with the environment

differs in various regions of Asia. The empirical results are obtained by models of panel regression,

which divide a balanced panel dataset of 46 countries into five groups depending on their

subregions over the period 1991–2017. The tests of panel cointegration estimation found a

majority of the cointegrated variables and verified the long-run relationship between the variables.

The long-run coefficients are estimated using a fully modified ordinary least-squares (FMOLS)

method, and results conclude that industrialisation has a positive impact on the carbon dioxide

emissions in the long run. These findings reveal that various industrialisation development

strategies should be pursued in a bid to reduce emissions, depending on the levels of economic

growth. Based on the findings, some policy suggestions are proposed for Asian economies.

1. Introduction

Low environmental maintenance has brought back the significance of environmental

friendliness throughout the globe during the last few centuries. Nevertheless, the thirst

for economic and financial development has led to severe environmental degradation.

Rapid industrialisation and urbanisation have developed enormous environmental

difficulties, particularly in terms of energy consumption and carbon emissions. The

industrial revolution pushed urbanisation and industry settlement as the main routes to

social and economic restructuring. These paths, however, encourage the fast increase of

consumption of fossil fuel and yield important quantities of CO

2

and other emissions of

greenhouse gasses. The developing countries, caused by fast economic growth, have

©2020 The Authors. OPEC Energy Review published by John Wiley & Sons Ltd on behalf of Organization of the

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227

experienced fast-paced urbanisation and industrialisation since the 1970s. These

procedures also go hand in hand with the rapidly rising demand for fossil fuels and

CO

2

emissions.

In 1997, an international treaty was implemented known as the Kyoto Protocol, in

which states ratified the greenhouse gas emission reduction on the grounds of scientific

analysis, in line with attempts taken to improve the worldwide environment. More

specifically, the advanced nations have been called upon to make about 5.2% of their

greenhouse gas emissions relative to 1990 levels. The United Nations Framework

Convention on Climate Change (UNFCCC) also suggests a regional decrease, with

European nations, for example, recommended to decrease their emissions by 8%, while

the suggestion was made for Canada and Japan to decrease their emissions by 6%. From

2008 to 2012, the first commitment was made, and the Doha amendment was envisaged

for 2013–2020 as an expansion of the Kyoto Protocol. European countries are committed

to a reduction of 5%, while the underlying span of 15% of the overall CO

2

emission

reduction is projected compared to the 1990 basic year. Although these are wonderful

steps towards a better environment, some states are still not showing much interest in

these measures.

As the intergovernmental panel on climate change report (Coninck et al., 2005)

shows, emissions have increased by approximately 80 per cent, from 21 to 38 gigatonnes

(Gt) between 1970 and 2004. New growing evidence suggests that significant emission

accumulation from human activity’s use of non-renewable energy is the primary driver

of worldwide warming, which could lead to a global climate disaster. Developed

countries have made the most emission sessions in the past and presently produce

elevated emissions per capita, but pursuing economic growth implies that developing

nations will generate the majority of future emissions in the world. Economic growth,

although in the past, does not contain an intrinsic necessity for emitting higher quantities

of greenhouse gas (GHGs). In the meantime, industrialisation and urbanisation trends

also differ across areas (Zhang and Lin, 2012); carbon emissions are thus affected at both

the general and per capita levels by regional characteristics. Research that only from a

domestic perspective examines the effects of industrialisation on CO

2

emissions ignores

the effects of regional variations and leads towards a partial estimate. The paper deals

with the effects on global and regional CO

2

emissions of industrialisation in Asia.

A stream of literature has found the relationship of CO

2

emission with other factors

like non-renewable energy consumption and environmental quality (Majeed and Luni,

2019; Çetin and Ecevit, 2017; Omri, 2013). A variety of air quality indices, such as CO

2

,

CH

4

,SO

2

emissions, are taken into consideration to quantify environmental degradation

(Borhan and Ahmed, 2012; Yasmeen et al., 2019). The CO

2

emission levels are directly

linked to an economy’s manufacturing level and take the statistically positive association

of manufacturing levels with investment outflow (Adu et al., 2013; Abosedra et al.,

OPEC Energy Review September 2020 ©2020 The Authors. OPEC Energy Review published by John Wiley & Sons Ltd

on behalf of Organization of the Petroleum Exporting Countries

228 Ayaz Zafar et al.