A growing economy increases carbon emissions
Developing economies are an important engine of world economic growth. However, ensuring the quality of environmental assets is maintained amid rapid economic change remains a major challenge for most developing countries.
Soaring carbon emissions are contributing to global warming and drastic, long-lasting changes to our climate. In 2021, energy-related carbon emissions increased by six per cent, bringing it to the highest level ever. Meanwhile, rising global temperatures continue unabated, leading to more extreme weather. Associate Professor Jacob Wood, Associate Dean of Research at James Cook University in Singapore, says, “Although these alarming environmental changes have so far been attributed to the widespread industrialisation of mostly high-income countries, the rapid industrialisation of developing countries and their impact on CO2 emissions cannot be ignored.”
Of course, the United Nations’ Sustainable Development Goals (SDGs) aim to reduce carbon emissions through its SDG Climate Action. However, as Associate Professor Wood notes, it’s worth paying attention to developing nations, which account for more then two-thirds of global carbon emissions, and how they may reduce their impact as well as address climate change concerns.
In collaboration with various other expert researchers in the field, Associate Professor Wood analysed the combined effects of energy usage, industrialisation, gross domestic product (GDP) growth, and urbanisation on carbon emissions across 23 developing countries over the 1995–2018 period.
The results demonstrated that for a 1% increase in GDP per capita, industrialisation, urbanisation, and energy use increase carbon emissions by 0.17%, 0.54%, 2.32%, and 0.23%, respectively. Consequently, further tests showed that a bidirectional causal relationship exists between energy use, GDP growth, urbanisation, industrialisation, and carbon emissions.
Subsequently, the study shows one-way causality between industrial development and energy consumption. In addition, the causal analysis revealed that economic expansion, industrialisation, and energy use lead to increased carbon emissions. Furthermore, increasing urbanisation in emerging economies may pose a threat to the environment.
Ultimately, this means that carbon emissions levels in developing countries increase in relation to rising energy consumption, industrialisation, GDP growth, and urban development. Moreover, Associate Professor Wood observes, it supports the idea “that per capita GDP growth causes environmental degradation in the short-term due to the significant contribution the industrial sector plays in this development.”
As such, Associate Professor Wood suggests that “developing country governments must establish a comprehensive environmental protection framework that tackles relevant challenges from both a country and sector-specific viewpoints. Ensuring there is no broad-brush approach to policy development would also help to minimise the long-term environmental impacts that economic growth can cause.”
Mukut Sikder, Chao Wang, Xiaoxia Yao, Xu Huai, Limin Wu, Frederick KwameYeboah, Jacob Wood, Yuelin Zhao, Xuecheng Dou, The integrated impact of GDP growth, industrialization, energy use, and urbanization on CO2 emissions in developing countries: Evidence from the panel ARDL approach, Science of The Total Environment, Volume 837, 2022, 155795, ISSN 0048-9697, https://doi.org/10.1016/j.scitotenv.2022.155795.
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