Economic Growth and Environmental Pollution in Brunei: ARDL Bounds Testing Approach to Cointegration: A New Perspective

Aims: This study examined the short-run and long-run dynamic relationship between economic growth and environmental pollution in Brunei. We adopted Auto Regressive Distributed Lag (ARDL) model to scrutinize the existence of the Environmental Kuznets Curve (EKC) among the studying variables by using time series data cover the period of 1974 to 2014.  Methodology: The ARDL bound test revealed the existence of a long-run relationship among the integrated variables when CO2 chosen as a dependent variable. Results: The results support the existences of EKC hypotheses in the long-run whereas in the shortrun an inverted U-shaped curve was not confirmed between GDP and CO2 in Brunei. The results of Granger causality based on VECM analysis have shown unidirectional causality runs from economic growth to CO2 in the short-run. Further analysis through stability test indicates the coefficients in the model are stable and do not suffer from structural break within the time taken in the study. Conclusion: Bruneian government should continue to support global environmental preservation policies to reduce the emission of harmful gases into the atmosphere, applying a modern technology that is not harming to the environment and consumes less energy to mitigate the adverse impact of CO2 and other greenhouse gases in the country.

Author(s) Details

Issa Moh’d Hemed
Zanzibar University (ZU), P.O.Box 2440, Zanzibar, Tanzania.

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