Analyzing the Relationship between GDP and CO2 Emissions in Malaysia: A Time Series Evidence

Abstract

The study examines the relationship between Malaysia's per capita GDP, CO2 emissions, and energy consumption from 1970 to 2008, treating CO2 emissions as a controllable variable to assess the economic impact of reducing emissions. The findings indicate that Malaysia can meet its emission reduction targets by implementing minimal yet necessary measures without severely impacting economic growth. The study uses econometric techniques to analyze long-term and short-term relationships among these variables. Results show that energy consumption is a crucial driver of economic expansion, highlighting the challenge of reducing emissions while maintaining growth. Although Malaysia’s economy remains carbon-intensive, strategic policies can facilitate a shift towards sustainable development. Reducing CO2 emissions does not necessarily lead to economic stagnation. Targeted investments in renewable energy and energy-efficient technologies can help mitigate economic disruptions while ensuring environmental sustainability. The study underscores the role of government policies in balancing economic growth with emission reduction goals. Optimizing energy consumption and adopting cleaner technologies are crucial to Malaysia’s strategy. The study suggests regulatory frameworks that support sustainable growth while minimizing the economic impact of emission reductions. Findings provide policymakers with insights to design effective strategies ensuring environmental sustainability alongside economic development. Achieving a balance between economic growth and environmental commitments is possible with carefully planned policy measures. This research offers guidance for Malaysia in navigating climate goals while maintaining economic stability, reinforcing the importance of integrating sustainability into national development strategies.