DOES URBANIZATION, INDUSTRIALIZATION, AND INCOME UNEQUAL DISTRIBUTION LEAD TO ENVIRONMENTAL DEGRADATION? FRESH EVIDENCE FROM ASEAN

Abstract

Over recent years, the income gap within the Association of Southeast Asian Nations (ASEAN) has widened, while the rate of environmental degradation has drastically accelerated since the 1990s. In past literature from diverse disciples, the threat to environmental sustainability posed by industrialization and urbanization has been studied by scholars and researchers. The key objective of the present study is to investigate into whether factors like industrialization, urbanization, income inequality, real per capita output and human capital index  play a role in ensuring environmental sustainability in terms of carbon emission in three different measures. Data is collected through the World Bank website for the period of 1995-2015, and panel regression methods have been applied due to the time series and cross-sectional nature of the units of observations. Study results confirm that industrialization is a direct cause of environmental sustainability issues as reflected in the high levels of CO2 emissions from transport (% of total fuel combustion). At the same time, urbanization and human capital index are causing a decline in the levels of carbon emission. Additionally, this study provides a valuable empirical framework for exploring the relationship between the understudy variables. However, various limitations should also be noted while reviewing and using the results of the present study. The present study only targets six economies out of the whole ASEAN region, applies traditional panel regression models, is notably missing some descriptive details of the data and study variables, and applies some robust checks as well. This means that future studies should be encouraged to cover the gap by addressing and overcoming these limitations in the future. Lastly, this study highlights some practical implications specifically in the context of ASEAN economies.