Economic Integration and Environmental Pollution Nexus in Asean: A PMG Approach

The nexus between economic integration and environmental pollution has been intensively analyzed by a number of studies, but the empirical evidence more often than not remains controversial and ambiguous. This research applies the estimation technique Pooled Mean Group (PMG) introduced by Pesaran et al. (1999) and the cointegration test of Fisher-Johansen to examine the impacts of economic integration on environmental quality (measured by the CO\(_2\) emissions per capita) in Asean 8 countries during the 1986–2014 period. The empirical results provide a strong statistical evidence that economic integration increases environmental pollution in Asean countries, yet there exists an inverted U-shape of ecological Kuznets curve. The time required to return to equilibrium is 4 years, and the turning point’s GDP per capita is about 9,400 US Dollar/year (at constant 2010 prices). This research suggests that policy-makers should control the environmental standards in the projects to improve environmental pollution, to achieve sustainable economic development in the long-run.

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