Economic Globalization and Environmental Quality: a Spatial Analysis of Spillover Effects in Indonesia
DOI:
https://doi.org/10.11137/1982-3908_2025_48_65574Keywords:
Economic openness, Environmental qualityAbstract
Sustainable development is where development is implemented based on economic, social, and environmental principles. However, in the era of globalization, environmental principles are often neglected. The aim of this research is to measure the spatial impact of the economic globalization process on environmental quality in various regions in Indonesia. This involves identifying spillover patterns or cross-regional impacts of global economic activity. The variables used are environmental quality, globalization as seen in terms of economic openness, foreign direct investment, industry’s share of GDP, population growth, and the quality of human resources. This research uses a spatial econometric approach through a comparison between the Spatial Lag Model, Spatial Lag of X Model, and Spatial Error Model. Data are sourced from 33 provinces in Indonesia during the 2011-2022 period. The data in this research are secondary data taken from the Ministry of Environment and Forestry and also the Indonesian Central Statistics Agency. The research results show that environmental quality is affected by openness to trade, industry’s share of GDP, and the quality of human resources. Spillover effects on adjacent areas occur if there are changes in openness to trade, industry’s share of GDP, and the quality of human resources. Regional government policies are needed that are based on coordination between neighboring regions to minimize negative externalities.
References
Abban, O.J., Hongxing, Y., Nuta, A.C., Dankyi, A.B., Ofori, C., & Cobbinah, J. 2022, ’Renewable energy, economic growth, and CO2 emissions contained Co-movement in African oil-producing countries: A wavelet based analysis’, Energy Strategy Reviews, vol. 44, 100977.
Adiastuti, A. 2011, ‘Implementasi Foreign Direct Investment (FDI) di Indonesia (Sebelum dan Setelah Diundangkannya Undang-Undang Nomor 25 Tahun 2007 Tentang Penenaman Modal’, Pandecta, vol. 6, no. 2, pp. 139-149.
Apergis, N., & Ozturk, I. 2015, ‘Testing environmental Kuznets curve hypothesis in Asian countries’, Ecological Indicators, vol. 52, pp. 16–22, DOI:10.1016/j.ecolind.2014.11.026.
Arrow, K., Bolin, B., Costanza, R., Dasgupta, P., Folke, C., Holling, C.S., Jansson, B., Levin, S., Mäler, K., Perrings, C. & Pimentel, D. 1995, ‘Economic growth, carrying capacity, and the environment’, Science, v. 268, pp. 520–521.
Aspiansyah, A., & Damayanti, A. 2019, ‘Model Pertumbuhan Ekonomi Indonesia: Peranan Ketergantungan Spasial’, Jurnal Ekonomi Dan Pembangunan Indonesia, vol. 19, no. 1, pp. 62–83, DOI:10.21002/jepi.v19i1.810.
Azizurrohman, M., & Hartarto, R.B. 2019, ‘Trade and Environment in Indonesia: Case Study of ASEAN-China Free Trade Agreement,’ Jurnal Ekonomi dan Studi Pembangunan, vol. 20, no. 1, pp. 1-10.
Bernard, J., & Mandal, S.K. 2016, ‘The Impact of Trade Openness on Environmental Quality: An Empirical Analysis of Emerging and Developing Economies’, WIT Transactions on Ecology and The Environment, vol. 203, pp. 195-208.
Blanco, I., Santos, S., Gea, J., Güell, R., Torres, F., Gimeno-Santos, E., Rodriguez, D.A., Vilaró, J., Gómez, B., Roca, J. & Barberà, J.A. 2013, ‘Sildenafil to improve respiratory rehabilitation outcomes in COPD: a controlled trial’, The European respiratory journal, vol. 42, no. 4, pp. 982–992, DOI: 10.1183/09031936.00176312.
Burnham, K.P. & Anderson, D.R. 2002, ‘Model Selection and Multimodel Inference’, Springer, vol. 45, no. 2, p. 181, DOI:10.1198/tech.2003.s146.
Carbaugh, R.J. 2008, Internasional Economics, Kesebelas eds., Thomson South Western, USA.
Cole, M.A. 2004, ‘Trade, The Pollution Haven Hypothesis and The Environmental Kuznets Curve: Examining The Linkages’, Ecological Economics, vol. 48, pp. 71-81.
Coondoo, D. & Dinda, S. 2002, ‘Causality between income and emission: A country group-specific econometric analysis’, Ecological Economics, vol. 40, pp. 351–367.
Copeland, B., & Taylor, S. 1994, ‘North-South trade and the environment’, Quarterly Journal of Economics, vol. 109, pp. 755–787, DOI:10.2307/2118421.
Dinda, S. 2004, ‘Environmental Kuznets curve hypothesis: A survey’, Ecological Economics, vol. 48, no. 4, pp. 431–455, DOI:10.1016/j.ecolecon.2004.02.011.
Dinda, S., Coondoo, D. & Pal, M. 2000, ‘Air quality and economic growth: an empirical study’, Ecological Economics, vol. 34, no. 3, pp. 409-423.
Elhorst, J.P. 2021, ‘The dynamic general nesting spatial econometric model for spatial panels with common factors: Further raising the bar’, Review of Regional Research, vol. 42, pp. 249–267, DOI:10.1007/s10037-021-00163-w.
Ertur, C. & Koch, W. 2007, ‘Growth, Technological Interdependence and Spatial Externalities: Theory and Evidence’, Journal of Applied Econometrics, vol. 22, pp. 1033–1062, DOI:10.1002/jae.963.
Fang, Z., Gao, X. & Sun, C. 2020, ‘Do financial development, urbanization and trade affect environmental quality? Evidence from China’, Journal of Cleaner Production, vol. 259, 120892.
Febriana, S., Diartho, H.C. & Istiyani, N. 2019, ‘Hubungan Pembangunan Ekonomi terhadap Kualitas Lingkungan Hidup di Provinsi Jawa Timur’, Jurnal Dinamika Ekonomi Pembangunan, vol. 2, no. 2, pp. 58-70.
Fibrianto, E.P. 2018, ‘Studi Empiris Keterkaitan Perdagangan Internasional Dengan Kualitas Lingkungan Menggunakan Cross-Countries Data’, Journal of Economics Development Issues, vol. 1, no. 1, pp. 41-52.
Gilbert, M. 2017, ‘AFTA dan Kualitas Lingkungan Hidup di Indonesia’, Bina Ekonomi, vol. 21, no. 2, pp. 181-202.
Gill, F.L., Gill, A.R., Viswanathan, K.K. & Karim, M.Z.B.A, 2020, ‘Analysis of pollution haven hypothesis (PHH) and environmental Kuznets curve (EKC) in selected Association of South-East Asian Nations (ASEAN) countries’, Review of Economics and Development Studies, vol. 6, no. 1, pp. 83-95.
Grossman, G.D. 1991, Environmental Impact of A North American Free Trade Agreement, Working paper no. 3914, National Bureau of Economic Research.
Handayani, B.D., Yanto, H., Pujiati, A., Ridzuan, A.R., Keshminder, J.S. & Shaari, M.S. 2022, ‘The implication of energy consumption, corruption, and foreign investment for sustainability of income distribution in Indonesia’, Sustainability, vol. 14, no. 23, 15915.
Haug, A.A. & Ucal, M. 2019, ‘The role of trade and FDI for CO₂ emissions in Turkey: Nonlinear relationships’, Energy Econ, vol. 81, pp. 297–307, DOI:10.1016/j.eneco.2019. 04.006.
Hysa, E., Kruja, A., Rehman, N.U., & Laurenti, R. 2020, ‘Circular economy innovation and environmental sustainability impact on economic growth: An integrated model for sustainable development’, Sustainability, vol. 12, no. 12, 4831.
Irfan, M., Ullah, S., Razzaq, A., Cai, J. & Adebayo, T.S. 2023, ‘Unleashing the dynamic impact of tourism industry on energy consumption, economic output, and environmental quality in China: A way forward towards environmental sustainability’, Journal of Cleaner Production, vol. 387, 135778. DOI:10.1016/j.jclepro. 2022.135778.
Krugman, P.R. & Obstfeld, M. 2004, Teori dan Kebijakan Ekonomi Internasional, Edisi Kelima ed., Jakarta.
Kuznets, S. 2019, ‘Economic growth and income inequality’, in The gap between rich and poor, Routledge, pp. 25-37.
Kuznets, S.S. 1955, ‘Economic growth and income inequality’, American Economic Review, vol. 45, no. 1, 243.
Le, T.H., Chang, Y. & Park, D. 2016, ‘Trade openness and environmental quality: International evidence’, Energy Policy, vol. 92, pp. 45–55, DOI: 10.1016/j.enpol.2016.01.030.
Li, Z., Dong, H., Huang, Z. & Failler, P. 2019, ‘Impact of Foreign Direct Investment on Environmental Performance’, Sustainability, vol. 11, pp. 1-16.
Malthus T.R. 1830, An essay on the principle of population and a summary view of the principle of population, Penguin Books, London.
Managi, S., Hibiki, A. & Tsurumi, T. 2009, ‘Does trade openness improve environmental quality?’, Journal of Environmental Economics and Management, vol. 58, no. 3, pp. 346–363, DOI:10.1016/j.jeem.2009.04.008.
Muhammad, B. & Khan, S. 2021, ‘Understanding the relationship between natural resources, renewable energy consumption, economic factors, Globalization and CO₂ emissions in developed and developing countries’, Natural Resources Forum, vol. 45, no. 2, pp. 138–156, DOI:10.1111/1477-8947.12220.
Mukherjee, S. & Chakraborty, D. 2009, ‘Is There Any Relationship Between Environmental Quality, Human DEvelopment Index and Economic Growth? Evidences From Indian States’, Munich Personal RePEc Archive, pp. 1-34.
Nasrollahi, Z., Moradi, M. & Rezaei, H. 2014, ‘Pollution Haven Hypothesis and Foreign Direct Investment: Evidence from Selected Asian Countries’, Journal of International Relations, vol. 12, no. 2, pp. 111-124.
Nihayah, D.M., Pujiati, A., Mulyanto, M. & Nihayah, A.N. 2023, ‘The quality of life (QoL) of human resources in Java Island’, in AIP Conference Proceedings, vol. 2765, no. 1, AIP Publishing.
Nowbutsing, B.M. 2014, ‘The Impact of Openness on Economic Growth: Case of Indian Ocean Rim Countries’, Journal of Economics and Development Studies, vol. 2, pp. 407-427.
Nuraini, R. & Mudakir, Y. 2019, ‘Analisis Pengaruh Keterbukaan Ekonomi terhadap Pertumbuhan Ekonomi (Studi Kasus: ASEAN Tahun 2007-2017)’, Jurnal Dinamika Ekonomi Pembangunan, vol. 2, no. 2, pp. 20-35.
Panayotou, K., Woodroffe, C.D., Jones, B.G., Chenhall, B., McLean, E. & Heijnis, H. 2024, ‘Patterns and rates of sedimentary infill in the Minnamurra River estuary, South-Eastern Australia’, Journal of Coastal Research, vol. 50, pp. 688-692.
Prasetyo, P.E., Pujiati, A., Setyadharma, A. & Kistanti, N.R. 2022, ‘The Spirit of Social Entrepreneurship and Institutional Environment as Drives of Sustainable Economic Growth’, International Journal of Sustainable Development & Planning, vol. 17, no. 8, pp. 2485-2492, DOI:10.18280/ijsdp.170816.
Pujiati, A., Murniawaty, I., Nihayah, D.M., Muarrifah, I. & Damayanti, N. 2022, ‘A simulated policy towards green public transportation in a metropolitan in Indonesia’, International Journal of Energy Economics and Policy, vol. 12, no. 5, pp. 162-168.
Pujiati, A., Nihayah, D.M., Adzim, F. & Nikensari, S.I. 2020, ‘Implementation of sustainable transportation using gap analysis: Case study of semarang city’, Journal of Critical Reviews, vol. 7, no. 7, pp. 47-54.
Pujiati, A., Nurbaeti, T. & Damayanti, N. 2022, ‘What are the factors that determine differing levels of environmental quality? Evidence from Java and other islands in Indonesia’, Management of Environmental Quality: An International Journal, vol. 34, no. 2, pp. 290-307.
Pujiati, A., Rahman, Y.A., Kistanti, N.R., Nihayah, A.N., & Nabila, N.A. 2024, ‘Interconnected forces: analyzing urbanization, economic growth, energy consumption, and forest area in the top 10 populous nations' CO₂ emissions’, International Journal of Energy Economics and Policy, vol. 14, no. 2, pp. 669-675.
Pujiati, A., Setiaji, K., Purasani, H. N. & Farliana, N. 2019, ‘Integration of environmental economics to build economic behaviors’, in E3S Web of Conferences, vol. 125, pp. 2009, EDP Sciences.
Pujiati, A., Yanto, H., Handayani, B.D., Ridzuan, A.R., Borhan, H. & Shaari, M.S. 2023, ‘The detrimental effects of dirty energy, foreign investment, and corruption on environmental quality: New evidence from Indonesia’, Frontiers in Environmental Science, vol. 10, 1074172.
Purnomo, D., & Istiqomah, D. 2008, ‘Analisis Peranan Sektor Industri Terhadap Perekonomian Jawa TEngah Tahun 2000 dan Tahun 2004 (Analisis Input Output)’, Jurnal Ekonomi Pembangunan, vol. 9, no. 2, pp. 137-155.
Rahajeng, A. 2014, ‘Pertumbuhan Ekonomi dan Kualitas Lingkungan Hidup Indonesia 2014: Modifikasi Kurva Kutznet’, Seminar Nasional Teknologi Terapan 2014 (SNTT 2014), pp. 762-766.
Raihan, A., Pavel, M.I., Muhtasim, D.A., Farhana, S., Faruk, O. & Paul, A. 2023, ‘The role of renewable energy use, technological innovation, and forest cover toward green development: Evidence from Indonesia’, Innovation and Green Development, vol. 2, no. 1, 100035.
Sahu, N.C., & Kumar, P. 2020, ‘Impact of Globalization, financial development, energy consumption, and economic growth on CO₂ emissions in India: Evidence from ARDL approach’, Journal of Business Economics and Management, vol. 8, no. 3, pp. 241–245, DOI:10.18178/joebm.2020.8.3.644.
Samimi, A.J., Kashefi, A., Salatin, P. & Lashkarizadeh, M. 2011, ‘Enviromental Performance and HDI: Evidence from Countries Around The World’, Middle East Journal of Scientific Reseach, vol. 10, no. 3, pp. 294-301.
Shahabadi, A., Samari, H. & Nemati, M. 2017, ‘Factors Affecting Environmental Performance Index (EPI) in Selected OPEC Countries’, Iranian Economic Review, vol. 21, no. 3, pp. 457-467.
Suprijanto, A. 2011, ‘Dampak Globalisasi Ekonomi Terhadap’, Jurnal Ilmiah CIVIS, vol. 1, no. 2, pp. 100–119. DOI:10.26877/civis.v1i2.592.
Todaro, M. & Smith, S. 2000, Pembangunan Ekonomi Jilid 1, Haris Munandar ed., Erlangga, Jakarta.
Trainer, F.E. 1990, ‘Environmental Significance of Development Theory’, Ecological Economics, vol. 2, pp. 277-286.
Voumik, L.C., Akter, S., Ridwan, M., Ridzuan, A.R., Pujiati, A., Handayani, B.D., Keshminder, J.S. & Razak, M. I. M. 2023, ‘Exploring the factors behind renewable energy consumption in Indonesia: Analyzing the impact of corruption and innovation using ARDL model’, International Journal of Energy Economics and Policy, vol. 13, no. 5, pp. 115-125.
Wang, K.H., Su, C.W., Lobonţ, O.R. & Moldovan, N.C. 2020, ‘Chinese renewable energy industries’ boom and recession: Evidence from bubble detection procedure’, Energy Policy, vol. 138, 111200, DOI:10.1016/j.enpol.2019. 111200.
Wang, Q. & Wang, L. 2021, ‘The nonlinear effects of population aging, industrial structure, and urbanization on carbon emissions: A panel threshold regression analysis of 137 countries’, Journal of Cleaner Production, vol. 287, 125381, DOI:10.1016/j.jclepro.2020.125381.
Wang, Q., Zhang, F., & Li, R. 2023, ‘Free trade and carbon emissions revisited: The asymmetric impacts of trade diversification and trade openness’, Sustainable Development, vol. 32, no. 1, pp. 876-901, DOI:10.1002/sd.2703.
Wang, S.X., Fu, Y.B. & Zhang, Z.G. 2015, ‘Population Growth and The Environmental Kuznets Curve’, China Economic Review, vol. 36, pp. 146-165.
Waslekar, S.S. 2014, ‘World environmental Kuznets curve and the global future’, Procedia-Social and Behavioral Sciences, vol. 133, pp. 310-319.
Xie, Q., Wang, X. & Cong, X. 2020, ‘How does foreign direct investment affect CO₂ emissions in emerging countries? New findings fro’m a nonlinear panel analysis’, Journal of Cleaner Production, vol. 249, 119422, DOI:10.1016/j.jclepro.2019.119422.
Yanto, H., Pujiati, A., Handayani, B.D., Ridzuan, A.R., Keshminder, J.S. & Rachman, M.A. 2024, ‘Good Government Governance as a Moderator in Achieving Sustainable Development Goals in Indonesia’, International Journal of Sustainable Development & Planning, vol. 19, no. 2, pp. 715-722, DOI:10.18280/ijsdp.190228.
You, W., & Lv, Z. 2018, ‘Spillover effects of economic globalization on CO₂ emissions: A spatial panel approach’, Energy Economics, vol. 73, pp. 248–257, DOI:10.1016/j.eneco.2018.05.016.
Zafar, M.W., Saud, S. & Hou, F. 2019, ‘The impact of globalization and financial development on environmental quality: Evidence from selected countries in the organization for economic co-operation and development (OECD)’, Environmental Science and Pollution Research, vol. 26, no. 13, pp. 13246–13262, DOI: 10.1007/s11356-019-04761-7.
Zaman, K., Khan, H., Khan, M.M., Saleem, Z. & Nawaz, M. 2011, ‘The Impact of Population on Environmental Degradation in South Asia: Application of Seemingly Unrelated Regression Equation Model’, Environmental Economics, vol. 2, no. 2, pp. 80-88.
Zhang, M., Ajide, K.B. & Ridwan, L.I. 2021, ‘Heterogeneous dynamic impacts of nonrenewable energy, resource rents, technology, human capital, and population on environmental quality in Sub-Saharan African countries’, Environment, Development and Sustainability, vol. 24, no. 10, pp. 11817–11851, DOI:10.1007/s10668-021-01927-7.
Downloads
Published
How to Cite
Issue
Section
License
This work is licensed under a Creative Commons Attribution 4.0 International License.
This journal is licensed under a Creative Commons — Attribution 4.0 International — CC BY 4.0, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.
