Citation
Cheah, Chan Fatt
(2019)
Institutional regulations, environmental degradation and green GDP in Malaysia.
Doctoral thesis, Universiti Putra Malaysia.
Abstract
Malaysia currently uses the gross domestic product (GDP) as the measurement of
national income. However, when measured alone, GDP is limited because it only represents
the final monetary value of goods or services. Measuring Green GDP can help to address this
shortcoming because it considers the environmental impacts. Malaysia has the aim of
becoming a high-income economy, one way this can be achieved is through the growth of green
industries and by using Green GDP to promote higher economic growth.
Conventional GDP fails to take into account the external costs like pollution,
deforestation, and mineral exploitation. Nature the implantation of government legislation
determines the impact felt by society, which all have detrimental public health
consequences. High levels of these problems result in higher average health expenditure.
Based on the issues described, this research contains several objectives.
The first objective is to investigate the relationship between the quality of regulation
and external costs. Effective regulatory procedures are essential to manage and reduce external
costs that are shown to cause health issues in society. Therefore, this research second objective
is to examine the impact of external costs on health expenditure. Finally, this study
investigates the environmental impacts of Green GDP, and conventional GDP are compared
and discussed.
The quality of regulatory processes plays an essential role in controlling environmental
problems. If external costs are reduced, it leads to a reduction in
overall health expenditure. The Environmental Kuznets Curve (EKC) states that increases in income levels initially leads to an increase in pollution. By using
the EKC hypothesis, it is probable that Green GDP is an appropriate measure of
environmental impact and economic development in Malaysia.
Autoregressive Distributed Lag (ARDL) is used to investigate the impact for the first and the
second objective. The first objective investigates the impact of the regulatory quality to external
costs. However, for the second objective, external costs are an independent variable that
determines the impact on health expenditure. Lastly, the third objective employs a
Nonlinear ARDL (NARDL) model to test the EKC hypothesis by employing GDP and Green GDP
as a proxy for income. The data contained information from 1980 to 2017 and was sourced from
World Development Indicators (WDI) (2018).
When regulatory quality increases, it leads to a reduction in external costs. This
reduction in external costs is essential to achieve green or sustainable growth.
Increases in carbon dioxide (CO2) emissions also have detrimental external costs.
Secondly, when there was an increase in external costs, personal healthcare expenditure will
also be increased. Increased external costs and CO2 emissions show a positive
correlation with health expenditure.
For the environmental aspect, when GDP and Green GDP both used as a proxy for income,
there are similar impact on CO2 emissions. However, energy consumption and trade can lead to an
increase in CO2 emissions. In general, incorporating Green GDP into the policy-making process
results in a healthier environment compared to solely relying on conventional GDP.
If Green GDP used effectively in Malaysia, then Green GDP can promote sustainable growth
through the improvement of institutions and the promotion of zero pollution strategies. The
results show that external cost in Malaysia leads to increase in the health expenditure.
Policymakers should act to reduce these external costs and promote a better living
environment. Lastly, it is proven that using GDP or Green GDP are no different in term of CO2
emission in Malaysia. Therefore, it is time for Malaysia to use Green GDP as a
measurement for national income to help achieve the goal of green growth.
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Additional Metadata
Item Type: |
Thesis
(Doctoral)
|
Subject: |
Gross domestic product - Malaysia |
Subject: |
Economic policy |
Subject: |
Environmental economics - Case studies |
Call Number: |
SPE 2020 8 |
Chairman Supervisor: |
Associate Professor Abdul Rahim Abdul Samad, PhD |
Divisions: |
School of Business and Economics |
Depositing User: |
Ms. Nur Faseha Mohd Kadim
|
Date Deposited: |
13 Jul 2021 04:40 |
Last Modified: |
06 Dec 2021 07:19 |
URI: |
http://psasir.upm.edu.my/id/eprint/89877 |
Statistic Details: |
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