Does the De-Industrialization and Tertiarization Process De-Carbonize Emissions in Asian Countries?

To date, slowdown trends in the global 𝐶𝑂2 emissions registered in 2012 to 2015 argue due to the transformation from an industrial based on a less-energy intensive services oriented. Nevertheless, inconsistent and insufficient evidence of the role of sectoral composition in influencing the carbon emissions is a serious academic and policy gaps that were overlooked. Thus, due the fact that Asian countries experiences a dramatic shift in phases of economic structure, this study aim to investigate whether the de-industrialization and tertiarization process might be the solution to the carbon emissions in Asian countries. As the structural heterogeneity exists widely across countries in Asian countries, this paper employs 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 dynamic nature of carbon emissions. In sum, this study found that the de-industrialization moderating the 𝐶𝑂2 emissions in Asian countries, while the expansion of service sector bound to reduce the 𝐶𝑂2 emissions as presented in quadratic functional. Nevertheless, an N-shape relationship observe in cubic functional, thus there is no guarantee that long-term levels of pollution emissions will continue to fall as countries shifting to services-based economy. The finding of this study is important not only in term a value-added of current knowledge, but also in assisting the development of strategic planning and better sustainable policy to combat the growth of 𝐶𝑂2 emissions.