Material footprint, economic growth, and climate change in emerging Southeast Asian markets

Abstract

The trade-off between environmental degradation and economic growth is occurring at various global scales due to the use of non-renewable energy. In developed countries, the majority of this issue has been the focus of research and attention. Currently, there is a research gap regarding the material footprint in the relationship between economic development and climate change in emerging markets. This research used a Panel Vector Autoregression (PVAR) model to analyze the causal effects of foreign direct investment, economic development, and material footprint in emerging Southeast Asian economies using Generalized Method of Moments (GMM) regression. This analysis employs five variables, namely the Annual Growth Rate of Real GDP per Capita at Constant 2015 $ (GDP), Carbon Dioxide Emissions (CDE), Material Footprint (MF), Direct Economic Loss Attributed to Disasters (DEL), and Domestic Material Consumption (DMC). The study’s data collection spans from 2000 to 2021. The results of this study provide evidence for the existence of correlations between economic phenomena and climate change in Southeast Asian nations. Material footprints and energy consumption contribute to environmental deterioration. Economic expansion necessitates acknowledging the trade-off that arises from the increased CO2 emissions released into the environment. A 1% increase in economic growth leads to the release of more than 9% of CO2 emissions into the environment. Conversely, there is a significant relationship between the amount of environmental pollution and the material footprint. This indicates that the growing consumption of input materials and the inefficient use of these resources are contributing to environmental pollution in rising economies. Natural catastrophes account for more than 3% of the economy’s CO2 emissions. Given the ongoing efforts to lessen the impact of climate change, the study recommends that policy solutions concentrate on restructuring economic growth and improving energy efficiency in industrial operations.

Keywords

• Economic growth
• climate change
• material footprint
• market economy
• Southeast Asian markets
• Economics