Relationships between Urbanization, Economic Growth, Energy Consumption, and CO2 Emissions: Empirical Evidence from Indonesia

• Published in: The Journal of Asian finance, economics, and business pp. 79 - 90
• Main Authors: Abdul BASHIR, Didik SUSETYO, Suhel SUHEL, Azwardi AZWARDI
• Format: Journal Article
• Language: English
• Published: 한국유통과학회 01.03.2021
• Subjects: 경제학
• ISSN: 2288-4637; 2288-4645
• DOI: 10.13106/jafeb.2021.vol8.no3.0079

This study aims to investigate the relationship between urbanization, economic growth, energy consumption, and CO2 emissions in Indonesia. The data used in the study are time-series data for the period 1985–2017; the data utilized are sourced from World Development Indicators obtained on the World Bank database. The method uses a quantitative approach that applies the vector error correction model based on the Granger causality test. The empirical results reveal that, in the short run, there is evidence that urbanization and energy consumption can causes CO2 emissions, and they also prove that urbanization can cause energy consumption. Also, other findings prove the existence of longrun relationships flowing from energy consumption, economic growth, and CO2 emissions toward urbanization, as well as the existence of the relationship flowing from urbanization, economic growth, and CO2 emissions towards energy consumption. The results of testing the relationship between economic growth and CO2 emissions reveal that the environmental Kuznets curve hypothesis is proven in Indonesia. Thus, policies are needed to limit the impact of urbanization through high awareness-raising to maintain environmental quality and greater use of energy. Also, energy conservation policies are needed in all sectors, especially the electricity, industry, and transportation sectors. KCI Citation Count: 0