Urbanisation and sustainable development: Econometric evidence from Australia

This study examines the effect of urbanisation on economic growth and carbon emissions in Australia for the period 1960–2019 using Cobb-Douglas production function with a Fully Modified Ordinary Least Squares and Dynamic Ordinary Least Squares estimators. The findings indicate that while urbanisation has a significant negative effect on economic growth, it has a significant positive effect on Australia’s carbon emissions. Other factors such as physical capital and labour were found to have a significant positive impact on economic growth, while trade openness has a significant negative effect on economic growth. Our findings suggest that energy consumption and foreign direct investment do not affect Australia’s economic growth. Further, our results validate the Environmental Kuznets Curve in Australia, while other factors such as energy consumption and population growths were found to worsen carbon emissions. It was also revealed that trade openness and foreign direct investment (FDI) are not insignificant contributors to carbon emissions in Australia. The policy implications are discussed.