Economic Growth In Malaysia

The fastest-growing economies of Malaysia in the developing world is start from year 1970s. Malaysia transformed from a major exporter of palm oil, rubber, tin, tropical timber and other primary commodities to the exporter of manufactured goods and this cause the country Per capita income become doubled in less than a generation. From year around 1970 until year 1980, economic growth was raise around 7.7% and it also raise to 5.8% in year 1980 to year 1990. In year 1990 to year 2005, the economic growth about 6.5%.

During year 2008, crisis of financial appear and it caused the economic growth reduce. At the same time, Malaysia having a transformation from primary sector (agriculture based economy) to secondary sector (industrial based). The

(NEAC, 2009) From the resource we collect, we find out that there have significant concern show that when the goal achieve, environment quality was improve which is emission of CO2 reduce and the economic growth in Malaysia has improve. So, we can get the information about economic growth and emission of CO2 are mutually exclusive. In year 1970 to year 1980, economic in Malaysia shift from primary sector which is agricultural based to the secondary sector which is industrial based. (Hasan, 2007) ; This changing cause the consumption in energy raise substantially. Recently, Malaysia is trying to move to services based which is tertiary sector but it was a highly energy intensified sector. If Malaysia move to tertiary sector, the goal of 40% emission reduction will be distorted. So, to solve this problem, Malaysia need to use renewable energy which is low carbon technology to produce the goods or services. There are some empirical studies that investigated the relationship between the CO2 emission and economic growth. The result show out the graph is linear, U shape, inverted U shape or any other shapes. (Warner, 2008) In Malaysia, there are limited study in relationship of economic growth and CO2 emission. The major source of CO2 emission is from power sector which is electricity. In year 2004, CO2 emission

Relationships and sources Techniques Limitations

Positive relationship between economic growth and energy consumption, and emission; (Ang, 2008)

Johansen co-integration; VECM-based Granger causality test Did not consider the quadratic form of GDP per capita to examine the existence of EKC

Predicted CO2 emissions and energy consumption should be tripled to maintain the GDP at 4.6% by 2030; (Gan & Li)

Ordinary least squares (OLS) estimation No unit-root test, although macroeconomic variables are likely to be characterized by unit root processes. (Nelson & Plosser, 1982)

Bidirectional relationship between CO2 emissions and economic growth; (Azlina & Mustapha, 2012)

Johansen co-integration test; VECM-based Granger causality test Presence of mixed-order integration. Johansen technique is highly sensitive to the selection of optimal number of lags. (Gonzalo,