A transport environmental Kuznets curve analysis for Malaysia: exploring the role of corruption

Validity of the environmental Kuznets curve (EKC) hypothesis is consistently and widely debated among economists and environmentalists alike throughout time. In Malaysia, transport is one of the “dirtiest” sectors; it intensively consumes energy in powering engines by using fossil fuels and poses significant threats to environmental quality. Therefore, this study attempted an examination into the impact of corruption on transport carbon dioxide (CO2) emissions. By adopting the fully modified ordinary least squares, canonical cointegrating regression, and dynamic ordinary least squares in performing long-run estimations, the results obtained based on the annual data spanning from 1990 to 2017 yielded various notable findings. First, more corruption would be attributable towards increased transport CO2 emissions. Second, a monotonic increment of transport CO2 emission was seen with higher economic growth and thus invalidated the presence of EKC. Overall, this study suggests that Malaysia has yet to reach the level of economic growth synonymous with transport CO2 emission reduction due to the lack of high technology usage in the current system implemented. Therefore, this study could position policy recommendations of use to the Malaysian authorities in designing the appropriate economic and environmental policies, particularly for the transport sector.