Income, manufacturing and the environment : evidence from Malaysia

• Main Author: Rashid, Arlinah Abd
• Published: Lancaster University 2011
• Subjects: 338.927
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.587054

Over the last decades there has been a growing concern about the impact of economic development on the environment. Economic development can cause environmental degradation, threatening the health of both humans and ecosystems. This research investigates the relationship between income and pollution in all Malaysian states. In the first two parts of the study, the relationships between income, air and water pollution are examined. A panel data set comprising ambient concentrations of air and water pollution for all Malaysian states was constructed for the period of 1990 to 2007. The Environmental Kuznets Curve (EKC), which hypothesises that pollution at first increases, and then decreases, as per capita income rises, is tested. This inverse U-shaped EKC relationship was found for only one type of air pollutant - carbon monoxide. In the water pollution data, there is no evidence of an EKC relationship found. The income-air pollution findings suggest that typically levels of air pollution concentrations improve as per capita GDP rises, whilst the study on income and water pollution shows that rising income can have positive impacts on different measures of water pollution. The final part of the research focuses on a micro level issue: the manufacturing industry and pollution. Employing a panel data model covering the period between 1996 and 2005, with observations across 13 Malaysian states, and 11 manufacturing groups, the study aims to analyse the relationship between pollution and manufacturing industries' indicators - gross output and value added. Analysing the possible relationship between manufacturing and pollution enables the development of effective policies for controlling pollution from this major industry. In essence, the results of the manufacturing-pollution study show that manufacturing worsens both air and water pollution in Malaysia, suggesting the need for further industry level pollution policies.