Economic Growth, Energy Consumption and Environment Relationship: A Panel Data Analysis of South Asian Countries

Abstract

This study examines the linkage among CO2 emissions, GDP per capita and renewable energy consumption in South Asian region by applying fixed effect model. The study utilized panel data in case of 8 South Asian countries to check the impact of GDP per capita, renewable energy consumption, population density and foreign direct investment (FDI) on CO2 emissions from 2006 to 2020. The estimated results indicated that with a rise in GDP per capita of South Asian countries, CO2 emissions in the region are increasing. However we found a non-linear linkage between CO2 emissions and GDP per capita which validates the inverted U-shaped relationship between these variables. Usage of renewable energy is playing its role in mitigating CO2 emissions in South Asia. Population density and FDI are also responsible for polluting the environment by increasing CO2 emissions. It is recommended to policy makers of South-Asian countries to better invest in the renewable energy sources that tend to mitigate the effect of CO2 emissions on environment.