Luận văn thạc sĩ UEH does economic growth affect environmental quality in some east asian countries

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UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL

STUDIES

HO CHI MINH CITY THE HAGUE

VIETNAM THE NETHERLANDS

VIETNAM - NETHERLANDS

PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

DOES INCOME PER CAPITA AFFECT

CARBON DIOXIDE EMISSIONS IN SOME

EAST ASIAN COUNTRIES?

BY

PHAM THI THU HUYEN

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

HO CHI MINH CITY, MAY 2012

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UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL

STUDIES

HO CHI MINH CITY THE HAGUE

VIETNAM THE NETHERLANDS

VIETNAM - NETHERLANDS

PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

DOES INCOME PER CAPITA AFFECT

CARBON DIOXIDE EMISSIONS IN SOME

EAST ASIAN COUNTRIES?

A thesis submitted in partial fulfilment of the requirements for the degree of

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

By

PHAM THI THU HUYEN

Academic Supervisor:

PHAM KHANH NAM

HO CHI MINH CITY, MAY 2012

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ACKNOWLEDGEMENT

This thesis could not complete without considerable and kindly mental supports

from my supervisor, Dr. Pham Khanh Nam, who spent his valuable time to help me

to find materials, books and super my schedule tightly. He also response quickly as

soon as I asked for help and give comments, which partly contribute to the success

of this thesis. From bottom of my heart, I sincerely thank him for all.

I grateful acknowledge to Prof., Dr. Nguyen Trong Hoai, Dr. Nguyen Van Ngai and

Dr. Phan Dinh Nguyen – Public Defense Committee for their important comments

and explanations that support me to fulfill the thesis.

This study also benefits greatly from the enthusiastic assistance of Dr. Le Van

Chon, whom I got knowledge on econometric and suggested the suitable models for

the study.

I would like to express my thanks for all students of MDE 16 for their unceasing

assistance and encouragement during the course. I also show deep gratitude to the

lectures, VNP staffs, library staffs for their helps in accumulating knowledge,

accessing dataset and materials as well.

Last but not least, it gives my deepest grateful to my family members, husband,

managers and colleagues for their dear encouragement, give favorable times and

opportunities to finish the M.A course as well as the thesis.

I pledge to bear full responsibilities for errors, omissions and shortcomings of the

study.

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TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION ................................................................... 1

1.1. Problem Statement .............................................................................. 1

1.2. Objectives of study .............................................................................. 4

1.3. Research questions............................................................................... 4

1.4. Scope of the research............................................................................ 5

1.5. Structure of the thesis........................................................................... 5

CHAPTER 2: EMPIRICAL AND THEORETICAL BACKGROUND ........ 6

2.1. Theoretical background........................................................................ 6

2.2. Empirical review .................................................................................. 9

CHAPTER 3: RESEARCH METHODOLOGY........................................ ...14

3.1. The conceptual framework................................................................. 14

3.2. Variables ............................................................................................ 15

3.2.1. Dependent environment variables............................................. 15

3.2.2. Explanatory variables................................................................ 17

GDP per capita .......................................................................... 17

Foreign Direct Investment (FDI)............................................... 17

Trade openness .......................................................................... 19

Population density ..................................................................... 20

3.3. Data……………………………………… ........................... ……… 22

3.4. The Econometric model .................................................................... 22

CHAPTER 4: DATA ANALYSIS ............................................................... 28

4.1. Carbon Dioxide Emissions and GDP for 6 East Asian countries ...... 28

4.2. Descriptive analysis............................................................................ 30

4.3. The Environment Kuznets curve (EKC) ........................................... 32

4.4. Determinants of pollution .................................................................. 40

CHAPTER 5: CONCLUSION AND POLICY IMPLICATIONS .............. 46

5.1. Main findings and policy implications............................................... 46

5.2. Limitation of the research and recommendations for further study... 50

REFERENCES ................................................................................................. 52

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APPENDICES

A: Summary of empirical studies on different the EKC hypothesis 57

B: Description of variables and data sources 71

C: Description of CO2 –GDP of six East Asian countries individually 74

D: Estimated results 78

E: Tests 82

LIST OF FIGURES

Figure 2.1. The Kuznets Curve (1955) and the Environmental Kuznets Curve 7

Figure 2.2. The Environmental Kuznets Curve in N-shape 9

Figure 3.1. Conceptual framework of the study 14

Figure 4.1. CO2 emissions for the period of 1990-2007 28

Figure 4.2. CO2 emissions and GDP for the period of 1990-2007 29

Figure 4.3. The EKC shape for six East Asian countries 37

Figure 5.1. An overview of determinants on environmental quality 48

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LIST OF TABLES

Table 3.1. Summary of variables description 21

Table 4.1. Summary Statistic on the sample observations 30

Table 4.2. Correlation on the sample observations 31

Table 4.3. Estimated results for the EKC with different models

(without time trend)

33

Table 4.4. A comparison of estimated results for the EKC with FEM

models

34

Table 4.5. Estimated results for the EKC (N-shape) with FEM 36

Table 4.6. Estimated results for EKC with FEM time effects 38

Table 4.7. Estimated results for FEM with extended model (time

effects)

41

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ABBREVIATIONS

EKC : Environmental Kuznets curve

FDI : Foreign Direct Investment

NGOs : Non-government organizations

CO2 : Carbon dioxide emissions per capita

GDP : Gross Domestic Products

GHG : Greenhouse gas

OLS : Ordinary least square

FEM : Fixed Effects Model

REM : Random Effects Model

X : Import

M : Export

NAFTA : The North American Free Trade Agreement

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CHAPTER 1: INTRODUCTION

1.1. Problem Statement

For many centuries, the environmental degradation has become the issue of life with

economic development. Since the industrial revolution began in 18th century, it was

as a real problem. Industrial revolution with the technological progress brought

great achievements, especially the worldwide usage of fossil fuels and coal in

various industries. As a result, global economy has growth fast along with human

who significantly consumed natural resources leading environmental quality is

worsening seriously (Irina, 2008). This implies that economic growth may affect

environmental quality.

Every nation wishes to pursue targets of economic growth without damaging

environment. This is not feasible when history shows that any country becomes an

industrial power, in the process of development, causing environmental damages,

which cannot solve for a short time. In order to serve quick economic growth

targets, the policies of incomprehensive industrialization and urbanization with

massive exploitation of natural resources have caused environmental problems in

these countries for recent years. Consequently, the air pollutions and global

warming have continuously increased by human’s uncontrolled activities in the

development process. For China case, environmental degradation is becoming

serious problems, which not only affects strongly to domestic but also causes

international consequences. Some specialists judged that environmental pollution is

creating challenges to government. It is also a long-term burden on the Chinese

people and “China’s problem has become the world’s problem” (Kahn and Yardley,

2007, p.2).

In the current context, environmental problem is not for an individual country to

cope with. It becomes the common hot issues and needs co-operation of worldwide

countries because of its global matter. Kim (1996) revealed that due to the quick

economic growth, environmental pollution has been in red alarm in China and it

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