Browse > Article
http://dx.doi.org/10.13106/jafeb.2021.vol8.no3.0079

Relationships between Urbanization, Economic Growth, Energy Consumption, and CO2 Emissions: Empirical Evidence from Indonesia  

BASHIR, Abdul (Department of Economics, Faculty of Economics, Universitas Sriwijaya)
SUSETYO, Didik (Department of Economics, Faculty of Economics, Universitas Sriwijaya)
SUHEL, Suhel (Department of Economics, Faculty of Economics, Universitas Sriwijaya)
AZWARDI, Azwardi (Department of Economics, Faculty of Economics, Universitas Sriwijaya)
Publication Information
The Journal of Asian Finance, Economics and Business / v.8, no.3, 2021 , pp. 79-90 More about this Journal
Abstract
This study aims to investigate the relationship between urbanization, economic growth, energy consumption, and CO2 emissions in Indonesia. The data used in the study are time-series data for the period 1985-2017; the data utilized are sourced from World Development Indicators obtained on the World Bank database. The method uses a quantitative approach that applies the vector error correction model based on the Granger causality test. The empirical results reveal that, in the short run, there is evidence that urbanization and energy consumption can causes CO2 emissions, and they also prove that urbanization can cause energy consumption. Also, other findings prove the existence of long-run relationships flowing from energy consumption, economic growth, and CO2 emissions toward urbanization, as well as the existence of the relationship flowing from urbanization, economic growth, and CO2 emissions towards energy consumption. The results of testing the relationship between economic growth and CO2 emissions reveal that the environmental Kuznets curve hypothesis is proven in Indonesia. Thus, policies are needed to limit the impact of urbanization through high awareness-raising to maintain environmental quality and greater use of energy. Also, energy conservation policies are needed in all sectors, especially the electricity, industry, and transportation sectors.
Keywords
$CO_2$ Emissions; Economic Growth; Energy; Urbanization;
Citations & Related Records
연도 인용수 순위
  • Reference
1 Anwar, A., Younis, M., & Ullah, I. (2020). Impact of Urbanization and Economic Growth on CO2 Emission: A Case of Far East Asian Countries. International Journal of Environmental Research and Public Health, 17(2531), 1-8. https://doi.org/10.3390/ijerph17072531   DOI
2 Arouri, M. E. H., Ben Youssef, A., M'henni, H., & Rault, C. (2012). Energy consumption, economic growth and CO2 emissions in Middle East and North African countries. Energy Policy, 45, 342-349. https://doi.org/10.1016/j.enpol.2012.02.042   DOI
3 Bahmani-Oskooee, M., & Brooks, T. J. (2003). A new criteria for selecting the optimum lags in Johansen's cointegration technique. Applied Economics, 35(8), 875-880. https://doi.org/10.1080/00036840210129419   DOI
4 Cetin, A. P. M., & Ecevit, A. P. E. (2015). Urbanization, Energy Consumption and CO2 Emissions in Sub-Saharan Countries: A Panel Cointegration and Causality Analysis. Journal of Economics and Development Studies, 3(2), 66-76. https://doi.org/10.15640/jeds.v3n2a7   DOI
5 Salim, R., Rafiq, S., & Shafiei, S. (2017). Urbanization, Energy Consumption, and Pollutant Emission in Asian Developing Economies: an Empirical Analysis. Asian Development Bank Institute Working Paper Series, 718. https://doi.org/10.1017/S0020818300006032   DOI
6 Sebri, M., & Ben-salha, O. (2014). On the causal dynamics between economic growth, renewable energy consumption, CO2 emissions and trade openness: Fresh evidence from BRICS countries. Renewable and Sustainable Energy Reviews, 39, 14-23. https://doi.org/10.1016/j.rser.2014.07.033   DOI
7 Shahbaz, M., & Lean, H. H. (2012). Does financial development increase energy consumption? The role of industrialization and urbanization in Tunisia. Energy Policy, 40(1), 473-479. https://doi.org/10.1016/j.enpol.2011.10.050   DOI
8 Vu, T. V., & Huang, D. C. (2020). Economic Development, Globalization, Political Risk and CO2 Emission: The Case of Vietnam. Journal of Asian Finance, Economics and Business, 7(12), 21-31. https://doi.org/10.13106/jafeb.2020.vol7.no12.021   DOI
9 Wang, Q., Wu, S., Zeng, Y., & Wu, B. (2016). Exploring the relationship between urbanization, energy consumption, and CO2 emissions in different provinces of China. Renewable and Sustainable Energy Reviews, 54, 1563-1579. https://doi.org/10.1016/j.rser.2015.10.090   DOI
10 Wang, S., Zhao, T., Zheng, H., & Hu, J. (2017). The STIRPAT analysis on carbon emission in Chinese cities: An asymmetric laplace distribution mixture model. Sustainability (Switzerland), 9(2017), 1-13. https://doi.org/10.3390/su9122237   DOI
11 Wang, Shaojian, Li, Q., Fang, C., & Zhou, C. (2016). The relationship between economic growth, energy consumption, and CO2 emissions: Empirical evidence from China. Science of The Total Environment, 542, 360-371. https://doi.org/10.1016/J.SCITOTENV.2015.10.027   DOI
12 Chang, M. C. (2015). Room for improvement in low carbon economies of G7 and BRICS countries based on the analysis of energy efficiency and environmental Kuznets curves. Journal of Cleaner Production, 99, 140-151. https://doi.org/10.1016/j.jclepro.2015.03.002   DOI
13 Gielen, D., Boshell, F., Saygin, D., Bazilian, M. D., Wagner, N., & Gorini, R. (2019). The role of renewable energy in the global energy transformation. Energy Strategy Reviews, 24(2019), 38-50. https://doi.org/10.1016/j.esr.2019.01.006   DOI
14 Chang, T., Deale, D., Gupta, R., Hefer, R., Inglesi-, R., & Simo-kengne, B. (2017). The causal relationship between coal consumption and economic growth in the BRICS countries: Evidence from panel-Granger causality tests. Energy Sources, Part B: Economics, Planning, and Policy, 12(2), 138-146. https://doi.org/10.1080/15567249.2014.912696   DOI
15 Cowan, W. N., Chang, T., Inglesi-lotz, R., & Gupta, R. (2014). The nexus of electricity consumption, economic growth and CO2 emissions in the BRICS countries. Energy Policy, 66(2014), 359-368. https://doi.org/10.1016/j.enpol.2013.10.081   DOI
16 Ding, Q., Cai, W., Wang, C., & Sanwal, M. (2017). The relationships between household consumption activities and energy consumption in china: An input-output analysis from the lifestyle perspective. Applied Energy, 207(2017), 520-532. https://doi.org/10.1016/J.APENERGY.2017.06.003   DOI
17 Goorha, P. (2010). Modernization Theory. In Oxford Research Encyclopedia (Issue July 2018, pp. 1-24). Oxford University Press, USA. https://doi.org/10.1093/acrefore/9780190846626.013.266   DOI
18 Granger, C. W. J. (1969). Investigating Causal Relations by Econometric Models and Cross-spectral Methods. Econometrica, 37(3), 424-438. https://doi.org/10.2307/1912791. JSTOR 1912791   DOI
19 Heryadi, M. D., & Hartono, D. (2016). Energy efficiency, utilization of renewable energies, and carbon dioxide emission: Case study of G20 countries. International Energy Journal, 16(4), 143-152.
20 Hossain, S. (2012). An Econometric Analysis for CO2 Emissions, Energy Consumption, Economic Growth, Foreign Trade and Urbanization of Japan. Low Carbon Economy, 3(November), 92-105.   DOI
21 Johansen, S. (1988). Statistical analysis of cointegration vectors. Journal of Economic Dynamics and Control, 12(2-3), 231-254. https://doi.org/10.1016/0165-1889(88)90041-3   DOI
22 Johansen, S. (1996). Likelihood-based inference in cointegrated vector autoregressive models. Oxford University Press.
23 Kurnia, P., Darlis, E., & Putra, A. A. (2020). Carbon Emission Disclosure, Good Corporate Governance, Financial Performance, and Firm Value. Journal of Asian Finance, Economics and Business, 7(12), 223-231. https://doi.org/10.13106/jafeb.2020.vol7.no12.223   DOI
24 Lin, S., Sun, J., Marinova, D., & Zhao, D. (2017). Effects of population and land urbanization on China's environmental impact: Empirical analysis based on the extended STIRPAT model. Sustainability (Switzerland), 9(5), 1-21. https://doi.org/10.3390/su9050825   DOI
25 Lin, S., Zhao, D., & Marinova, D. (2009). Analysis of the environmental impact of China based on STIRPAT model. Environmental Impact Assessment Review, 29(6), 341-347. https://doi.org/10.1016/J.EIAR.2009.01.009   DOI
26 Liu, Y., Yan, B., & Zhou, Y. (2016). Urbanization, economic growth, and carbon dioxide emissions in China: A panel cointegration and causality analysis. Journal of Geographical Sciences, 26(2), 131-152. https://doi.org/10.1007/s11442-016-1259-2   DOI
27 Long, N. T. (2020). Do Foreign Direct Investment, Energy Consumption and Urbanization Enhance Economic Growth in Six ASEAN Countries? Journal of Asian Finance, Economics and Business, 7(12), 33-42. https://doi.org/10.13106/jafeb.2020. vol7.no12.033   DOI
28 Adebayo, T. S., Awosusi, A. A., & Adeshola, I. (2020). Determinants of CO2 emissions in emerging markets: An empirical evidence from mint economies. International Journal of Renewable Energy Development, 9(3), 411-422. https://doi.org/10.14710/ijred.2020.31321   DOI
29 Aguir Bargaoui, S., Liouane, N., & Nouri, F. Z. (2014). Environmental Impact Determinants: An Empirical Analysis based on the STIRPAT Model. Procedia - Social and Behavioral Sciences, 109, 449-458. https://doi.org/10.1016/j.sbspro.2013.12.489   DOI
30 Lutkepohl, H. (2013). Introduction to Multiple Time Series Analysis (2nd ed.). Springer-Verlag Berlin Heideberg.
31 Agung, P., Hartono, D., & Awirya, A. A. (2017). Pengaruh Urbanisasi terhadap Konsumsi energi dan emisi CO2 : Analisis Provinsi di Indonesia. Jurnal Ekonomi Kuantitatif Terapan, 10(2), 9-17.
32 Agus, F., Gunarso, P., Sahardjo, B. H., Harris, N., Noordwijk, M. Van, & Killeen, T. J. (2013). Historical CO2 Emissions From Land Use and Land Use Change From the Oil Palm Industry in Indonesia, Malaysia and Papua New Guinea. In: Reports from the Technical Panels of RSPOs 2nd Greenhouse Gas Working Group.
33 Marcotullio, P. J., Hughes, S., Sarzynski, A., Pincetl, S., Sanchez Peña, L., Romero-Lankao, P., Runfola, D., & Seto, K. C. (2014). Urbanization and the carbon cycle: Contributions from social science. Earth's Future, 2(10), 496-514. https://doi.org/10.1002/2014EF000257   DOI
34 Marcotullio, P. J., & Lee, Y. S. F. (2003). Urban environmental transitions and urban transportation systems: A comparison of the North American and Asian experiences. International Development Planning Review, 25(4), 325-354. https://doi.org/10.3828/idpr.25.4.2   DOI
35 Martinez-Zarzoso, I., & Maruotti, A. (2011). The impact of urbanization on CO2 emissions: Evidence from developing countries. Ecological Economics, 70(2011), 1344-1353. https://doi.org/10.1016/j.ecolecon.2011.02.009   DOI
36 Odugbesan, J. A., & Rjoub, H. (2020). Relationship Among Economic Growth, Energy Consumption, CO2 Emission, and Urbanization: Evidence From MINT Countries. SAGE Open, 10(2), 1-15. https://doi.org/10.1177/2158244020914648   DOI
37 Pao, H. T., & Tsai, C. M. (2010). CO2 emissions, energy consumption and economic growth in BRIC countries. Energy Policy, 38(12), 7850-7860. https://doi.org/10.1016/j.enpol.2010.08.045   DOI
38 Sadorsky, P. (2014). The effect of urbanization on CO2 emissions in emerging economies. Energy Economics, 41, 147-153. https://doi.org/10.1016/j.eneco.2013.11.007   DOI
39 Saidi, K., & Hammami, S. (2015). The impact of CO2 emissions and economic growth on energy consumption in 58 countries. Energy Reports, 1, 62-70. https://doi.org/10.1016/j.egyr.2015.01.003   DOI
40 Zakarya, G. Y., Mostefa, B., Abbes, S. M., & Seghir, G. M. (2015). Factors Affecting CO2 Emissions in the BRICS Countries: A Panel Data Analysis. Procedia Economics and Finance, 26, 114-125. https://doi.org/10.1016/S2212-5671(15)00890-4   DOI
41 Saidi, K., & Mbarek, M. Ben. (2017). The impact of income, trade, urbanization, and financial development on CO2 emissions in 19 emerging economies. Environmental Science and Pollution Research, 24(14), 12748-12757. https://doi.org/10.1007/s11356-016-6303-3   DOI
42 Zheng, H., Hu, J., Guan, R., & Wang, S. (2016). Examining Determinants of CO2 Emissions in 73 Cities in China. Sustainability, 8(12), 1-17. https://doi.org/10.3390/su8121296   DOI
43 Zhou, Y., & Liu, Y. (2016). Does population have a larger impact on carbon dioxide emissions than income? Evidence from a cross-regional panel analysis in China. Applied Energy, 180, 800-809. https://doi.org/10.1016/j.apenergy.2016.08.035   DOI
44 Ahuja, D., & Tatsutani, M. (2019). Sustainable energy for developing countries. Surveys and Perspectives Integrating Environment and Society, 2(1), 1-17.
45 Akram, N. (2012). Is Climate Change Hindering Economic Growth of Asian Economies? Asia-Pacific Development Journal, 19(2), 1-18. http://www.unescap.org/pdd/publications/index_apdj.asp%5Cnhttp://search.ebscohost.com/login.aspx?direct=true&db=ecn&AN=1368183&site=ehost-live   DOI
46 Al-Mulali, U., Saboori, B., & Ozturk, I. (2015). Investigating the environmental Kuznets curve hypothesis in Vietnam. Energy Policy, 76, 123-131. https://doi.org/10.1016/j.enpol.2014.11.019   DOI
47 Ang, J. B. (2007). CO2 emissions, energy consumption, and output in France. Energy Policy, 35, 4772-4778. https://doi.org/10.1016/j.enpol.2007.03.032   DOI