The effect of Malaysia’s trading activity on environmental degradation

Trading activity refers to the exchange of products and services between Malaysia and its international counterparts, contributing to growth in commerce. Conversely, though, environmental degradation refers to the deterioration of the environment, particularly as it relates to rising carbon dioxide (CO2) emissions, which contribute significantly to climate change. While Malaysia has experienced rapid economic expansion as a result of its vast trading activities, worries about the environmental deterioration that is being caused by rising pollution and carbon emissions have also been voiced. There are two objectives of this study. First, to comprehensively examine the effect of Malaysia's trading activity on environmental degradation. Second, to test the existence of an Environmental Kuznets Curve (EKC) trend within Malaysia's trading activities. The impact of Malaysia's trading activity on environmental degradation between 1980 and 2020 is examined in this study. This study employs ARDL in EViews version 10.0 to analyses data from reliable sources, such as the World Bank. The variables this study employed include energy consumption, trade openness, Gross Domestic Product (GDP), and carbon dioxide emissions. The findings support the Environmental Kuznets Curve (EKC) pattern, which shows a curvilinear link between trade, economic expansion, energy use, and environmental deterioration. Initially, CO2 emissions and energy consumption tend to rise with GDP per capita, which exacerbates environmental damage. The presence of a quadratic term, however, points to a potential turning point where the rate of environmental degradation slows down and moves closer to sustainability. This implies that trade openness, along with economic growth and energy consumption, influences environmental degradation. Aiming to achieve equilibrium between economic expansion and ecological well-being, recommendations to lessen the environmental impact of trading activities include adopting sustainable practices, promoting eco-friendly technologies, and strengthening regulatory measures for responsible waste management.