Assessing the Macroeconomic and Environmental Determinants of ASEAN’s Economic Growth: Evidence from Panel Data (2000–2023)

Abstract

This study investigates the relationship between economic growth and key macroeconomic–environmental indicators across ASEAN (2000–2023), highlighting the trade-offs between output expansion, resource use, and sustainability. Employing a panel data approach with the Fixed Effects Model (FEM), the analysis covers eight ASEAN economies—Brunei, Indonesia, Malaysia, Cambodia, Singapore, Thailand, the Philippines, and Vietnam. The dependent variable, the natural logarithm of Gross Domestic Product (LOG(GDP)), is regressed on inflation, final consumption expenditure, labour force, gross fixed capital formation, and emissions of CO2 and N2O. The results reveal that final consumption expenditure and CO2 emissions have positive and statistically significant effects on economic growth, indicating that energy-intensive consumption remains a key driver of output in the region. In contrast, inflation, labour force size, and N2O emissions exhibit negative and significant relationships with GDP, suggesting that price instability, inefficiencies in labour utilization, and environmental degradation can constrain economic performance. The model demonstrates high explanatory power (Adjusted R2 = 0.9998), although a low Durbin–Watson statistic signals potential autocorrelation. This study enriches the limited empirical literature on the macro–environmental nexus in ASEAN by applying an extended panel framework with robust country-fixed effects. The findings highlight the need for balanced policy strategies that promote sustainable growth through productivity enhancement, price stability, and emissions reduction.