TOURISM, ECONOMIC GROWTH, CO2 EMISSIONS: THE CASE OF MALAYSIA

Abstract

The main objective of this paper is to inspect whether is there any short run or long run causal relationship between tourism, gross domestic product (GDP) and CO2 emissions in Malaysia. The study in this field in Malaysia is in a state of paucity. This paper studied the data of three variables from 1980 to 2014. Tests performed are Granger causality test, Johansen co-integration test and Vector Error Correction Model (VECM). The result showed all three variables have unidirectional causality. Tourism affects GDP at the same time affect CO2. Due to the fact that there is the one-way causal relationship of the GDP towards CO2 emissions, the policymaker is greatly encouraged to enforce the law and regulations to minimize the negative externalities of CO2 emissions towards the climate change and environmental issues.