Navigating the nexus: unraveling technological innovation, economic growth, trade openness, ICT, and CO2 emissions through symmetric and asymmetric analysis

Abstract

In Malaysia’s rapid economic growth and industrialization, environmental degradation and carbon emissions pose significant challenges. As urbanization continues to rise, there is a growing recognition of the imperative to tackle CO₂ emissions. Trade openness and globalization drive economic activity but also heighten environmental pressures, including CO₂ emissions from transportation and industry. Information communication technology (ICT) usage, shaped by infrastructure and regulations, can either improve energy efficiency or increase energy consumption. The study examines the impacts of economic growth (EG), trade openness (TON), technological innovation (TIN), and ICT on CO₂ emissions in Malaysia, using both symmetric and asymmetric methods from 1985 to 2021. While many studies have explored environmental degradation, focusing on CO₂ emissions and ecological footprint indicators, only a limited number have delved into the combined impact of sustainable EG, TON, ICT, and TIN on Malaysia’s CO₂ emissions. Notably, these studies have often neglected the utilization of both symmetric and asymmetric methodologies. Hence, this study employed auto-regressive distributed lag (ARDL) and non-linear ARDL approaches to investigate the dynamic effects of the studied variables. The key findings from the symmetric analysis demonstrate that EG, TON, and ICT together take part in the increase of CO₂ emissions in both the short and long run. Particularly, technological innovation plays a significant role in reducing CO₂ emissions in the short term through the adoption of cleaner technologies. However, the results of the NARDL bound test reveal asymmetric long-term consequences of technological innovation, economic growth, and ICT on CO₂ emissions. The study underscores the need for CO₂ reduction policies in Malaysia, advocating for measures, such as incentivizing cleaner technologies and upgrading energy infrastructure. It also recommends implementing carbon pricing mechanisms for production and trade, alongside awareness campaigns to foster behavioral changes aimed at reducing emissions.