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http://dx.doi.org/10.13106/jafeb.2021.vol8.no5.0583

Dynamic Impact of Macroeconomic Variables on the Ecological Footprint in Malaysia: Testing EKC and PHH  

MEHRAAEIN, Mahmood (Department of Banking and Business, Faculty of Economics and Management Sciences, Baghlan University)
AFROZ, Rafia (Department of Economics, Faculty of Economics and Management Sciences, International Islamic University Malaysia)
RAHMAN, Mehe Zebunnesa (Department of Management, North South University)
MUHIBBULLAH, Md (Department of Economics, Faculty of Economics and Management Sciences, International Islamic University Malaysia)
Publication Information
The Journal of Asian Finance, Economics and Business / v.8, no.5, 2021 , pp. 583-593 More about this Journal
Abstract
The objective of this paper is to investigate the impact of economic growth (per capita real GDP), the square of per capita real GDP, energy use, financial development (FD), and foreign direct investment (FDI) on ecological footprint (EF) in the case of Malaysia over the period 1971-2014, by employing the ARDL approach. The long-run results revealed that economic growth has a significant positive impact on the ecological footprint and it implies that the economic growth deteriorates the environmental quality in Malaysia. Conversely, the square of GDP showed a negative and significant impact on the EF in the long run. As the coefficient of GDP in our study is positive and statistically significant while the coefficient of squared GDP is negatively significant, thus, this study supports the presence of the environmental Kuznets curve (EKC) hypothesis in the case of Malaysia. Furthermore, the result indicates that FDI has a positive and significant impact on the EF in the long run, which means a rise in FDI will enhance the environmental pollution level. Thus, it confirms the pollution haven hypothesis. Hence, it suggests that Malaysia imposes stricter environmental policies. Further, FDI and FD are causing GDP in Malaysia, but through increasing EF.
Keywords
FDI; EKC; Pollution Haven Hypothesis; Energy Consumption;
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