The Nexus Between Economic Growth, Foreign Direct Investment, Renewable Energy and Ecological Footprint in Malaysia
DOI:
https://doi.org/10.22452/IJIE.vol17no2.3Keywords:
Economic growth, foreign direct investment, renewable energy consumption, ecological footprint, Environmental Kuznets curveAbstract
The growing human demand for biologically productive land and ocean
areas significantly affects nature’s ability to restore its ecosystems. Therefore, this
study aims to examine the impact of economic growth, foreign direct investment
(FDI), and renewable energy usage on Malaysia’s ecological footprint from 1970 to
2018 using the environmental Kuznets curve model. The data was analysed using unit
root tests, autoregressive distributed lag (ARDL), and the Granger causality test. The
results suggest that increased economic growth and FDI have a negative impact on
environmental quality, both in the short term and the long term. Moreover, a rise in the
utilisation of renewable energy enhances the extent of environmental deterioration. The
analysis further confirms the validity of the environmental Kuznets curve hypothesis,
which suggests that the relationship between economic growth and environmental quality
in Malaysia follows an inverted U-shaped pattern. The results of the Ganger causality
test indicate a unidirectional relationship between economic growth and ecological
footprint, as well as a unidirectional association between ecological footprint and
renewable energy. These findings offer valuable information to policymakers about the
promotion of renewable energy consumption and the impact of foreign direct investment
on the sustainable development of the host country.
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