Determinants of Climate Change in Malaysia (1965 - 2019)

Foo, Chuan Meng (2022) Determinants of Climate Change in Malaysia (1965 - 2019). Final Year Project (Bachelor), Tunku Abdul Rahman University College.

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Abstract

Since Malaysia has gone through industrialisation, the country has experienced a rapid growth in the economic developments. Besides that, the country has also become more open to trade as international trade has become an important source of income for Malaysia. However, this outstanding economic performance has brought environmental degradation in the country as the CO2 emissions was found to be a rising trend. This phenomenon is seen to be a worrying issue towards Malaysia as the CO2 emissions has increased drastically for approximately 6.778 metric tonnes per capita over 44 years. Therefore, this underlying paper is aimed to examine whether the CO2 emissions in Malaysia is influence by economic growth, energy consumption and trade openness over the period of 1965 to 2019. In addition, there are some tests will be employed in this paper such as Unit Root test, Granger Causality test and Johansen-Juselius Co-Integration Test, Vector Error Correction (VECM) Model. The findings of the study suggested that there is a positive relationship between the CO2 emission of Malaysia and economic growth in long and short run. Similarly, the result also indicates that trade openness has positive long run relationship with CO2 emissions in both long run and short run. On the other hand, the energy consumption is found to be an insignificant variable to influence the CO2 emissions in Malaysia. As such, Malaysia government should implement a carbon tax and develop a new regional trade agreements (FTA) that include environmental considerations. It helps to create sustainable economic growth without harming the environment.