The carbon dioxide emission effects of domestic credit and manufacturing indicators in South Africa

Abstract

PurposeCarbon dioxide emission is one of the key causes of global warming and climate change. This study investigates the effects of domestic credit and manufacturing indicators on the emission of carbon dioxide in South Africa.Design/methodology/approachThe paper relied on time series data from 1975 to 2014 and employed regression and variance decomposition methods to analyze the data.FindingsIn the long run, manufacturing output increases total carbon emissions and emissions from solid fuel; manufactures trade reduces carbon emissions and domestic credit reduces emissions from the manufacturing industries and construction. The long-run effect of the changing technical characteristics of the manufacturing sector is sensitive to the estimation technique used. In the short run, however, changing technical characteristics of the manufacturing sector affect the level of carbon emissions. Income increases emissions from manufacturing industries and construction and urbanization increases total carbon emissions.Research limitations/implicationsPolicymakers have to initiate effective policies to promote energy-efficient technologies among manufacturing firms.Originality/valueThe paper examines the effect of manufacturing on carbon dioxide emissions in South Africa. It also examines the possible effect of manufactures trade on carbon emissions. Moreover, the possible effect of the changing characteristics of the manufacturing sector on carbon emissions is investigated.