Does sectoral modernization promote CO₂ emissions? Dynamic panel analysis of selected Asian countries

Modernization refers to the general process of progress within human societies. As a result of carbon dioxide emissions, global warming poses a significant threat to human sustainability. Therefore, the scientific community must thoroughly research the impact of modernization on CO₂ emissions. Surprisingly, just a few pieces of research have previously examined this subject. Asian economies are regarded as laggards in achieving the Sustainable Development Goals (SDGs), with environmental degradation being one of the key issues confronting these countries. This study used panel data regression to investigate the association between sectoral modernization and CO₂ emissions in South Asia. None of the existing studies has observed the sectoral modernization and CO₂ emission nexus in the region of South Asia. Therefore, this study bridges the research gap in the current literature. This study found that social sector transformation, energy sector, and services sector modernization have negative associations with CO₂ emissions in South Asia. However, both the agricultural sector and industrial sector modernization are positively associated with CO₂ emissions in South Asia. The empirical results from several models suggest that sectorial modernization has a significant and strong association with environmental sustainability. Access to a green and eco-friendly economy can increase modernization among different sectors of the economy to produce pro-environment products and society. Also, we found that FDI and trade policies influence the economies to follow environment-friendly economic practices.