Does Urbanization Affects Economic Growth? Panel Analysis on Selected ASEAN Countries

Azrul Fazrin, Mohd Asri and Mohd Khairul Hisyam, Hassan (2022) Does Urbanization Affects Economic Growth? Panel Analysis on Selected ASEAN Countries. In: 10th International Borneo Business Conference 2022 (iBBC) 2022), 19-21 September 2022, Raia Hotel & Convention Centre Kuching, Sarawak.

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Abstract

This research study is conducted to examine the relationship between economic development, population, carbon dioxide (CO2) emission, energy consumption and foreign direct investment during the process of urbanization in selected countries namely Brunei Darussalam, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. The annual dataset is taken from 2010 to 2017 in World Bank and CEIC. Software Eviews 10 is used for panel data analysis and tests used are Descriptive analysis, Pooled Ordinary Least Square (POLS) Method, Correlation Test, Random Effect Model, Fixed Effect Model, Breusch-Pagan LM test, Hausman Test, Panel Unit Root Test, Panel Cointegration Test and Panel Granger Causality Test. Results shows that all variable data is valid as the mean for each variable was below the range of minimum and maximum values reflect that there is no possible outlier. In addition, majority of the variables are in 1st order and found to be cointegrated, indicating the existence of a long-term equilibrium relationship between carbon dioxide emissions, FDI, population and energy consumption in terms of GDP. In the short term, there are three uni-directional Granger causality that run from GDP, energy consumption and foreign investment to population, while ECT shows that population and energy use exist in the long run. Policies such as decentralization, business and industry. and human resources need to be implemented by policy makers in selected ASEAN countries to ensure economic growth without affecting the environment during the process of urbanization.

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