Policy adjustments can help strike a balance between economic growth and environmental sustainability, which has increasingly been the heart to nations and regions throughout the World. This paper examines how public investment affects economic growth, energy consumption, and CO2 emissions in eight ASEAN countries: Cambodia, Myanmar, Malaysia, Indonesia, the Philippines, Singapore, Thailand, and Vietnam. Extension of a Cobb-Douglas production function and application of panel cointegration techniques reveal bidirectional Granger causation between public investment and both private development and CO2 emissions from 1980 to 2019. Public investment Granger causes energy usage, the opposite does not hold statistically. More findings from pooled mean group estimations show a mean-reversion dynamic that corrects disequilibria by 14% yearly. State investment crowds in private sector growth, energy use, and carbon footprint. It also finds an inverted U-shaped relationship between public investment and energy consumption, and a U-shaped relationship between public investment and CO2 emissions, indicating complex regional interactions. It is suggested the implementation of public investment policies that enrich green infrastructure projects to foster growth while minimizing environmental impacts, and encourage a strategic approach to public investment for prioritizing environmental sustainability and thus, achieving Sustainable Development Goals 7 to 9 and 11 to 13 in this region.
Keywords: ASEAN; CO2 emissions; Energy consumption; Panel cointegration; Public investment; Vietnam.
© 2023. The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature.