Increasing economic growth is one indicator of the economic development progress. Many theories explain that higher economic growth will trigger income distribution through a trickle-down effect (Wu et al., 2021). Income equality will be distributed automatically to the community through employment or other economic opportunities. Conventionally, economic growth is measured by GDP (Zhang et al., 2022).

However, developments measured by high GDP cannot solve problems such as poverty, unemployment, income distribution, and environmental degradation (Hoff et al., 2021). Therefore, economic development is needed, which does not only focus on economic growth but also focuses on sustainable economic development. Sustainable development does not only focus on economic growth but also other aspects in the form of economic sustainability, social sustainability, and environmental sustainability (Zugravu-Soilita et al., 2021). Development indicators for a sustainable economy do not use GDP and GRDP, calculated based on the System of National Accounts (SNA). The indicators are based on Green GDP or Green GRDP, calculated using an integrated concept between the environment and the economy (Listra & Prasetyia, 2020).

The utilization of green GDP will slow economic growth compared to brown GDP. Brown GDP is a term for conventional GDP which only focuses on economic sustainability but does not pay attention to environmental issues (Shirazi et al., 2020). This is because brown GDP does not include depletion factors and environmental damage. Thus, the value of natural resource loss and environmental damage cannot be identified (Suparmoko, 2020). Brown GDP only focuses on measuring economic value, while green GDP includes natural resource depletion and environmental degradation with the goal of sustainable development (Suryanto, 2009). Environmental degradation will decrease, and the recovery cost will be insignificant because it has been calculated as an annual cost of green GDP. Meanwhile, the brown GDP does allow for rapid economic growth because it does not consider the limits of environmental capabilities. After

all, there is a notion that high income can overcome environmental impacts. Exploiting natural resources causes depletion and severe environmental degradation. Thus, the recovery costs are more significant.

Air pollution is a form of environmental degradation caused by exploiting natural resources to achieve high economic growth. According to the United Nations Environment Program (UNEP), air pollution in ASEAN’s five countries, Indonesia, Malaysia, Thailand, the Philippines, and Myanmar, will have air quality above the ideal standards of the World Health Organization (WHO) in 2022. According to WHO, the maximum limit value for air quality is five micrograms per cubic meter. In Indonesia, Myanmar, Thailand, Malaysia, and the Philippines, the air quality is 30.4, 24.3, 18.1, 17.7, and 14.9 micrograms per cubic meter, respectively, indicating that the air quality in the area is not good. Therefore, research on Green GDP, which covers environmental degradation variables, is important, especially in the five ASEAN countries with non-ideal air pollution values.

Some studies conducted in East and Southeast Asia revealed that increased per capita economic growth positively impacts pollution. Increasing per capita income will generate environmental pollution (Gunay et al., 2022). (, 2022) also found that carbon dioxide emissions and population density positively affected economic growth in five South Asian countries. Research discussing the factors affecting green growth in 123 developed and developing countries concludes that economic development and the utilization of renewable energy positively influence green growth. At the same time, trade openness can harm green growth (Lin & Zhou, 2022). Nevertheless, each country requires a different strategy for achieving sustainable development goals. (Vieira & MacDonald, 2020) found that the current account balance can explain 12% of variations in economic growth by performing a simple linear regression.

Meanwhile, research conducted in ASEAN countries using panel data linear regression found that economic growth has a negative effect on carbon dioxide emissions. Meanwhile, population and economic growth have a positive but insignificant relationship (Hananya & Handoyo, 2021). This study’s results differ from research conducted in the Tebo district in 2016-2020, which concluded that population size partially and significantly affects economic growth (Darma, 2021). Other studies which employed Ordinary Least Squares (OLS) and Engle-Granger Error Correction Model (EG-ECM) found that Foreign Direct Investment has a positive and significant effect on economic growth in the short term (Lin & Zhou, 2022). A study by (Muvawala et al., 2021) regarding the relationship between economic growth, population, and carbon dioxide, revealed that population and economic growth have the opposite effect on carbon dioxide emissions in Uganda by using Autoregressive Distributed Lag (ARDL). The population significantly affects economic growth, while statistically, economic growth is not significant but has a positive effect in the long term (Çetin et al., 2023).

Thus, many previous studies have discussed economic growth. However, not many studies have discussed green growth in ASEAN countries. This study examines the effect of carbon dioxide emissions, foreign direct investment, the current account balance, and total population on green economic growth in ASEAN countries: Indonesia, Malaysia, Thailand, the Philippines, and Myanmar.

The fixed-Effect model is performed to estimate the data. The result showed that FDI and the current account balance negatively affect the Green Gross Domestic Product. Meanwhile, population and carbon dioxide emissions positively affect the Green Gross Domestic Product at the level of α 1% in the model. Table 2 provides the panel data estimation results.

The Chow test determines the best model between the Fixed Effects Model and the Common Effects Model (Pooled Least Squares). If the results accept the null hypothesis, the fixed effect model best fits the test, continuing with Hausman Test (Wu et al., 2021). The results of the Chow test are shown in Table 3 with a p-value or F probability of 0.000 <0.05. Thus, the Fixed Effects Model (FEM) is utilized.

The Chow test result showed that the null hypothesis was accepted. Then, the Hausman test is performed to select the model. The p-value of the Chi-Square or Random Cross Section showed 0.000 0.05. Thus, the fixed effect model is thechosen model.

The increasing economic growth of the ASEAN 5 countries (Indonesia, Malaysia, Thailand, the Philippines, and Myanmar) is followed by higher emission growth. Carbon emissions significantly affect the green economy (, 2022) This follows the phenomenon in Indonesia, where Indonesia is implementing a carbon tax for users of fossil fuels such as transportation, gas, and so on (Sikder et al., 2022). The legal basis for implementing a carbon tax is Presidential Regulation 98 of 2021 concerning carbon taxes and Law Number 7 of 2021 concerning harmonizing tax regulations.

The significant foreign direct investment in ASEAN-5 countries decreases the Green GDP. In supporting the green economy, the ASEAN-5 countries should construct policies to develop the economy and protect the environment simultaneously. Currently, preferring the quality of synergistic foreign investment has encouraged sustainable development in reducing the number of pollutants and emissions (Rofiuddin et al., 2019). Furthermore, it is necessary to encourage foreign investment and establish sustainable businesses to achieve inclusive green economic growth in ASEAN-5 countries to support green economies (Li & Ramanathan, 2020).

The current account balance shows transactions of goods, services, and transfers in a country. The current account balance can be either a surplus or a deficit. This study’s results are in line with (Çetin et al., 2023). The study found that the current account balance variable does not significantly affect economic growth. Furthermore, green GDP and the current account do not significantly affect green GDP.

The population has a positive and significant effect on Green GDP. The result contrasts (Sidjabat & Apsari, 2020), which stated that a large population causes greater exploitation of natural resources and the environment. People intend to exploit an environment to fulfill their needs when it still exists harmoniously. They exploit natural wealth without considering the ecological balance (Sidjabat & Apsari, 2020).

This study aims to determine the effect of carbon dioxide emissions, foreign direct investment, current account balance, and population on green GDP in five ASEAN countries. The findings show that carbon dioxide emissions and population positively and significantly affect green GDP. The two variables, foreign direct investment and population, have no significant effect on green GDP. Thus, as a regulator, the government has a role in managing policies related to carbon emissions and population in support of green economic growth. The government does not only focus on economic activities but also pays attention to environmental aspects and people’s welfare. Green GDP is at least a medium for reducing pressure on the environment. Some limitations of this study are the limited number of regressors to determine the effect of green GDP. Furthermore, the current study only covers five ASEAN countries, future studies can explore a wider scope of regions or increase the number of observed countries.

The authors would like to express gratitude to Universitas Muhammadiyah Surakarta for the funding provided under the programme of research grants 2022. The opinions expressed here in are those of the authors and don’t necessarily reflect the views of funding agency.