Impact of Urbanization and Economic Growth on CO2 Emission: A Case of Far East Asian Countries

Abstract

Rising CO₂ emission constitute a great threat to the world environment and public health. This study examines the major determinants of CO₂ emissions in Far East countries in the period of 1980 to 2017. We adopt a panel data-fixed effect model that accounts for time-invariant country-specific characteristics that may create omitted-variable bias. We also additionally take care of the time trend by applying an annual fixed effect into our model. The study finds that urbanization, economic growth and trade openness significantly determine CO₂ emission in the selected countries. Thus, the main policy suggestions are (a) to encourage green and sustainable urbanization, as it helps in economic progress but not at the expense of environmental deterioration; (b) to strategically regulate and improve industrial structure; and (c) enhance sharing of renewable energy in total energy consumption.

Keywords: CO2 emission; Far East countries; economic growth; fixed effect model; urbanization.