Impact of hydropower consumption, foreign direct investment and manufacturing performance on CO₂emissions in the ASEAN-4 countries

Abstract

Purpose The continuous increase in the discharges of carbon emissions (CO 2 ) in the global atmosphere and the likely negative consequences of this practice on the atmosphere draw the attention of researchers and policymakers to argue on the causes and perpetrators of CO 2 emissions. This paper aims to examine the impacts of hydropower consumption, FDI and manufacturing performance on CO 2 emissions in the Association of southeast Asian nations (ASEAN)-4 countries. Design/methodology/approach The study uses the data on variables, such as hydro-power consumption, FDI, manufacturing value added and CO 2 emissions spanning the period 1980–2015. Autoregressive Distributive Lag Bound test approach was used to assess the relationships among the variables. Findings The long run estimation of elasticities for all the countries indicates that the coefficient of hydro power consumption was found to be significantly related to CO 2 emissions only in Malaysia. Additionally, the coefficients manufacturing performance were found to be significant in influence the amount of CO 2 emission in all the ASEAN-4 countries. Furthermore, the coefficients of FDI inflows were found to be significant in explaining CO 2 emissions in Malaysia and the Philippines, respectively. In the short run, the estimated results show that all the variables were found to be significant in explaining CO 2 emissions in the countries under study. Research limitations/implications Singapore is excluded from the ASEAN-4 due to insufficient data on hydro energy consumption. Practical implications The study recommends that as Hydro power energy is a clean source of renewable electricity. Its consumption indicates a negative relationship with CO 2 emissions. The countries should emphasize more on the use of hydro source of energy than the other sources which increase the rate of CO 2 emissions in the atmosphere. Originality/value As most of the relevant previous studies did not consider the simultaneous impact of hydro energy consumption, FDI and manufacturing value added on CO 2 emissions in the ASEAN-4, this study is an important contribution to the existing relevant literature.