Performance and sustainability of environment under entrepreneurial activities, urbanization and renewable energy policies: A dual study of Malaysian climate goal

Abstract

We studied Malaysia's ability to achieve its climate goal amidst high rate of entrepreneurial activities and influx of people from rural to urban cities (urbanization) due to massive and prospective economic activities in the cities. For this, we investigate the impact of urbanization, entrepreneurial activities, and economic growth on its environmental performance. Renewable energy and financial development were also incorporated in the analyses to see if they have mitigating effect on the country's carbon emissions. Malaysian data of 1992Q1 to 2017Q4 were adopted for this study, and we also adopted both linear (dynamic ordinary least square-DOLS) and non-linear (nonlinear autoregressive distributed lag-NARDL) scientific and analytical approaches for better and clear insight from our study. Granger causality is equally applied as a robust check to the findings from DOLS and NARDL through direct inference from the selected variables. Findings from NARDL exposed significant impacts of the selected variables on the carbon emissions. Specifically, entrepreneurial activities, urbanization, financial development and renewables are mitigating carbon emissions, while economic growth is increasing emissions. Findings from DOLS and granger causality support the findings from the NARDL with more light on the trend of impact from economic growth to the Malaysia environment through inverted U-Shape EKC hypothesis. From granger causality nexus is established among the variable of interest in this study. From the findings, policy to mitigate carbon emissions can be framed with renewables, urbanization, entrepreneurial activities and financial activities. Authorities can initiate subsidising policies that will enable both private and public players to invest in energy sector strictly for the purpose of expanding renewable energy source.