Manufacturing, Economic Growth, and Carbon Emissions in ASEAN: A Dynamic Story Unfolded through Panel VAR Analysis
DOI:
https://doi.org/10.33830/tjeb.v6i2.12177Keywords:
CO2, Economic Growth, Manufacturing Value Added, Panel Vector AutoregressionAbstract
This study examines the dynamic relationship between industrial CO₂ emissions, economic growth (EG), and manufacturing value added (MVA) in ten ASEAN countries during the period 2014 to 2023, employing a Panel Vector Autoregression (Panel VAR) approach and Granger causality tests. The estimation results indicate that all three variables exhibit strong short term persistence, with changes in each variable being predominantly influenced by its own historical values. Industrial CO₂ emissions display a high degree of inertia; however, their statistically significant impact on economic growth emerges only in the medium term. Economic growth has a significant effect on MVA, suggesting the existence of a structural linkage between the two sectors. In contrast, MVA does not appear to influence economic growth in the short run. This finding seems to contradict Kaldor’s first law, although the internal dynamics of the manufacturing sector reflected in the significance of lags up to three previous periods support Verdoorn’s perspective on endogenous growth mechanisms. The Granger causality tests confirm that only economic growth Granger-causes MVA, while CO₂ emissions do not exhibit any causal relationship with the other variables. These findings emphasize the importance of adopting a more adaptive policy approach in the medium to long term to integrate industrial and environmental agendas into the economic growth strategy of the ASEAN region
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