Industrialization, energy consumption, and environmental pollution: evidence from South Asia

This study has been carried out to analyze the contribution of industrialization and energy consumption by keeping the role of urbanization on environmental pollution for South Asia. The study used Augmented Mean Group (AMG), Common Correlated Effects Mean Group (CCEMG) analysis, Westerlund co-integration test, and Dumitrescu-Hurlin causality test for the panel of South Asia covering the period 1984-2016. To measure the status of environmental pollution, CO2 is taken as a proxy indicator, and industrialization is measured by the industrial value-added. The results of AMG demonstrate that industrialization and energy consumption are significant indicators of environmental pollution and these empirical findings are also confirmed by the CCEMG model. The long-run co-integration between industrialization, energy use, urbanization, capital, and environmental pollution is also confirmed by the Westerlund co-integration test. The findings of the Dumitrescu-Hurlin causality test also confirmed the bidirectional causality between industrialization and pollution. A unidirectional causality is observed from energy consumption to pollution. The study suggests formulating policies for energy-efficient technologies in the industrial sector and the high-speed pattern of urbanization.