THE PRICE OF PROSPERITY: CARBON LOCK-IN, AGGLOMERATION ECONOMIES, AND THE EKC PATHWAY IN ASEAN

Abstract

This research investigates the macroeconomic determinants of CO₂ emissions in the ASEAN-10 region, analyzing the tension between rapid economic expansion, energy consumption, and demographic shifts. Utilizing a balanced panel dataset (2000-2022) comprising 230 observations, the research employs a Panel Estimated Generalized Least Squares (EGLS) approach with Cross-Section Weights and Fixed Effects to control for cross-country heterogeneity, heteroskedasticity, and first-order serial correlation. The log-log econometric estimation reveals that energy consumption exhibits an elastic, highly disproportionate impact on emissions (β=1.37), highlighting a severe regional "carbon lock-in." Economic growth remains fundamentally coupled with environmental degradation (β =0.52), firmly positioning ASEAN on the ascending limb of the Environmental Kuznets Curve (EKC). Conversely, population density exerts a significant mitigating effect (β =-0.69) on per capita emissions, providing robust empirical support for agglomeration economies and the "Compact City" hypothesis. The findings urgently call for structural policy shifts in ASEAN, moving beyond mere energy efficiency towards aggressive decarbonization of the primary energy mix and investments in high-density, green urban infrastructure.