Developing economies and environmental impact: A VECM analysis of external debt, ODA, and CO2

Muhammad Ahmad Mazher; Yasotha Nair Tramankuti; Zurul Aisya Osman

doi:10.58881/jcmts.v2i3.143

Authors

Muhammad Ahmad Mazher University Kuala Lumpur (UniKL), Malaysia
Yasotha Nair Tramankuti University Kuala Lumpur (UniKl), Malaysia
Zurul Aisya Osman University Kuala Lumpur (UniKl), Malaysia

DOI:

https://doi.org/10.58881/jcmts.v2i3.143

Keywords:

external debt, CO2, ODA, VECM

Abstract

The objective of this study is to examine the carbon dioxide (CO₂) emissions in Asian economies between 1990 and 2019, with a specific focus on their relationship with net official development assistance (NODA) and external debt. Utilizing the IPAT model as a theoretical framework, we employ various econometric methodologies to estimate both long-term and short-term outcomes. These methodologies encompass panel unit-root tests, cointegration techniques, and the VECM method. The findings of the research provide additional substantiation for the presence of cointegration among all variables. The analysis of long-term data revealed a robust and statistically significant relationship between gross domestic product (GDP) and carbon dioxide (CO₂) emissions. Conversely, a strong and inverse connection was identified between foreign debt and net official development assistance (NODA). The results indicated a modest but favorable relationship between the size of the Asian population and the levels of CO₂ emissions. The segment of recommendations encompasses comprehensive proposals and an extensive examination of various alternatives.

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