The Urbanization Effect on CO2 Emissions: New Evidence of Dynamic Panel Heterogeneity in Asian Countries

The great debates whether the transaction from rural to cities brings a better life or in the way around in Asia Countries have captured global attention. This study provides empirical evidences on the urbanization-CO_2 emissions nexus for a sample of 34 Asian countries from 1990 to 2016 which obtained from the time series databased of Emissions Database for Global Atmospheric Research (EDGAR) and World Development Indicator (WDI). This article aims to assess the possibility of urbanization role in counteract the growth of CO_2 emissions by examine the possibilities of non-linear relationship or specifically the possibility of the Kuznets' hypothesis. Due to the structural heterogeneity exists widely across countries in Asian countries, this paper employ Stochastic Impact by Regression on Population, Affluence, Technology (STRIPAT) model as its analytical framework and estimate using the Dynamic Common Correlated Effects (DCCE) estimator to address the heterogeneity, cross-section dependence, and dynamics nature of carbon emissions. The result shows that, initially, the CO_2 emissions intensify along with the growth of urbanization, and at higher urbanization bound to reduce the CO_2 emissions as presented in quadratic functional. Nevertheless an N-shape relationship observe in cubic functional. The finding of this paper have important implication on the Asian countries policymakers in archiving the sustainable urban society.