Are globalization, urbanization, and energy consumption cause carbon emissions in SAARC region? New evidence from CS-ARDL approach

Abstract

This study examines the impact of energy consumption, urbanization, and globalization on environmental degradation proxied by carbon emissions (CO₂) in the South Asian Association for Regional Cooperation (SAARC) countries, namely Sri Lanka, Pakistan, Maldives, Nepal, Bhutan, Bangladesh, and India using data over the period 1990-2018. The cross-sectional autoregressive distributed lag (CS-ARDL), pooled mean group (PMG), and Dumitrescu and Hurlin (D-H) Granger causality techniques are employed for the empirical analysis. First and second-generation panel unit root tests are used to determine the stationary level of all data series which reveals mixed order of integration. The empirical findings show that urbanization, gross domestic product (GDP) per capita income, energy consumption, industrial growth, globalization, and financial development cause CO₂ emissions, while the other variables, namely arable land and innovation, put negative effects on CO₂ emissions. Moreover, the D-H heterogeneous test results exhibit that bi-directional relationship exists between CO₂ and arable land, urbanization, industrial growth, and financial development, while a unidirectional causality exists between CO₂ emissions and GDP per head income. These findings suggest that planned urbanization, investment in renewable energy sources, and effective strategies regarding the economic and financial integration with the global economies are required for a clean and green environment.

Keywords: CO2 emissions; CS-ARDL; Energy use; Globalization; SAARC countries; Urbanization.