Master Thesis: The impact of economic growth on carbon emissions in Asia–Pacific member countries

The rapid economic growth observed in Asia-Pacific member countries during the 21st century, while boosting global GDP and trade, has concurrently intensified environmental concerns, particularly regarding carbon emissions. This region, a hub of dynamic economic development, faces the critical challenge of balancing industrial expansion and resource exploitation with ecological sustainability. Given the severe health and economic implications of air pollution, understanding the intricate relationship between economic growth and environmental degradation is paramount. This study addresses a specific temporal gap (2001-2023) in existing literature, analyzing how economic development, particularly during periods marked by major global events, influences carbon emissions across these crucial nations. The research aims to empirically quantify this impact and derive actionable policy implications for sustainable development.

Policymakers in Asia-Pacific countries, economists, environmental researchers, and academics interested in sustainable development and the environmental impacts of economic growth.

This master thesis empirically examines the impact of economic growth on carbon emissions within 21 Asia-Pacific Economic Cooperation (APEC) member countries over the period from 2001 to 2023, leveraging data from the World Bank. The core objective is to analyze how economic development, measured by Gross Domestic Product (GDP), along with other significant independent variables such as Foreign Direct Investment (FDI), Renewable Energy Consumption (EC), Population (POP), and Financial Development (FD), influences the dependent variable, carbon dioxide (CO2) emissions.

The research adopts a mixed-methods approach, combining qualitative evaluation of existing studies with a robust quantitative analysis of unbalanced panel data. Methodologically, it employs Pooled OLS, Fixed Effects Model (FEM), and Random Effects Model (REM) to account for unobserved heterogeneity, with the Hausman Test confirming FEM as the most appropriate. Further statistical rigor is applied using Feasible Generalized Least Squares (FGLS) to manage issues of heteroscedasticity and autocorrelation, ensuring reliable results.

Key findings reveal a nuanced relationship: while renewable energy consumption and foreign direct investment are found to negatively impact carbon emissions, thereby improving environmental quality, economic growth, population, and financial development are positively and significantly associated with increased emissions. These results underscore that unchecked development activities can be detrimental to environmental quality. Consequently, the study offers crucial policy implications aimed at reducing carbon emissions and fostering sustainable development in the Asia-Pacific region, providing valuable insights for policymakers striving to achieve a delicate balance between economic prosperity and environmental protection.