Industrial, Commercial, and Agricultural Energy Consumption and Economic Growth Leading to Environmental Degradation

Acknowledging the importance of sectoral energy utilization, the present study explores the impact of industrial, commercial, and agricultural energy consumption and economic progress of Malaysia on environmental degradation as measured by CO2 emissions. Applying the functionality of Cobb-Douglas, the authors utilized the long time series data from the period of 1978 to 2016. The outcomes of the empirical investigations using ARDL bound testing approach ascertain the presence of long-run association between GDP growth, capital, labor along with the sectoral energy utilizations of the country. Furthermore, the study also finds empirical evidences of positive significant associations of all energy consumptions with economic growth. Lastly, long run relationship among environmental degradation and energy consumption and economic growth along with financial development, trade openness, capital stocks, and urbanization as control variables. In addition, FMOLS results confirm that economic growth and energy consumption have a positive and significant impact on environmental degradation. This study brings a valid policy recommendation for the Malaysia Government to invest more in all sector of energy for the progress in the Malaysian economic growth.