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The Effects Of Trade Liberalization On The Environment: An Empirical Study
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The Effects Of Trade Liberalization On The Environment: An Empirical Study

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  • McCarney, Geoffrey R.
  • Adamowicz, Wiktor L.

Abstract

We seek to contribute to the emerging economic theory on trade, the environment and development. Using panel data across countries, econometric models are estimated to predict the effects of openness on organic water pollutant (BOD) and carbon dioxide (CO2) emissions. Results indicate that freer trade significantly increases emissions of both pollutants, thus reducing environmental quality. Moreover, the panel nature of the data allows heterogeneity across countries to be controlled, so that comparisons can be made of how different national characteristics influence the environmental impact of freer trade. By testing the effects of democratic versus autocratic governance, it is found that while greater democracy can induce significant reductions in BOD emissions as openness increases, it may also lead to increased CO2 levels. Meanwhile, by testing for and failing to reject the pollution haven hypothesis, it is suggested that environmental gains from openness in relatively rich countries may be coming at the expense of environmental degradation in poorer countries.

Suggested Citation

  • McCarney, Geoffrey R. & Adamowicz, Wiktor L., 2005. "The Effects Of Trade Liberalization On The Environment: An Empirical Study," Annual Meeting, 2005, July 6-8, San Francisco, CA 34157, Canadian Agricultural Economics Society.
    • Handle: RePEc:ags:caes05:34157
    DOI: 10.22004/ag.econ.34157
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    Cited by:

    1. Aiman Sana & Farzana Naheed Khan & Umaima Arif, 2021. "ICT diffusion and climate change: The role of economic growth, financial development and trade openness," Netnomics, Springer, vol. 22(2), pages 179-194, December.
    2. Shahbaz, Muhammad, 2019. "Globalization-Emissions Nexus: Testing the EKC hypothesis in Next-11 Countries," MPRA Paper 93959, University Library of Munich, Germany, revised 13 May 2019.
    3. Shahbaz, Muhammad & Hye, Qazi Muhammad Adnan & Tiwari, Aviral Kumar & Leitão, Nuno Carlos, 2013. "Economic growth, energy consumption, financial development, international trade and CO2 emissions in Indonesia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 25(C), pages 109-121.
    4. Aiman Sana & Farzana Naheed Khan & Umaima Arif, 2022. "ICT diffusion and climate change: The role of economic growth, financial development and trade openness," Netnomics, Springer, vol. 22(2), pages 179-194, October.
    5. Muhammad Shahbaz & Mantu Kumar Mahalik & Syed Jawad Hussain Shahzad & Shawkat Hammoudeh, 2019. "Testing the globalization-driven carbon emissions hypothesis: International evidence," International Economics, CEPII research center, issue 158, pages 25-38.
    6. Muhammad, Shahbaz & Lean, Hooi Hooi & Muhammad, Shahbaz Shabbir, 2011. "Environmental Kuznets Curve and the role of energy consumption in Pakistan," MPRA Paper 34929, University Library of Munich, Germany, revised 22 Nov 2011.
    7. Mohamed Abdouli & Sami Hammami, 2017. "Economic growth, FDI inflows and their impact on the environment: an empirical study for the MENA countries," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(1), pages 121-146, January.
    8. Shahbaz, Muhammad & Lean, Hooi Hooi & Shabbir, Muhammad Shahbaz, 2012. "Environmental Kuznets Curve hypothesis in Pakistan: Cointegration and Granger causality," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(5), pages 2947-2953.
    9. Shahbaz, Muhammad & Mallick, Hrushikesh & Kumar, Mantu & Loganathan, Nanthakumar, 2015. "Does Globalization Impede Environmental Quality in India?," MPRA Paper 67285, University Library of Munich, Germany, revised 15 Oct 2015.
    10. Fazle Rabbi & Delwar Akbar & SM Zobaidul Kabir, 2015. "Environment Kuznets Curve for Carbon Emissions: A Cointegration Analysis for Bangladesh," International Journal of Energy Economics and Policy, Econjournals, vol. 5(1), pages 45-53.
    11. Murshed, Muntasir, 2019. "Trade Liberalization Policies and Renewable Energy Transition in Low and Middle-Income Countries? An Instrumental Variable Approach," MPRA Paper 97075, University Library of Munich, Germany.
    12. Ruslan Zaynutdinov, 2015. "Russia and Europe Under Sanctions: Problems of Energy Development," International Journal of Energy Economics and Policy, Econjournals, vol. 5(2), pages 415-421.
    13. Puspaning Buanawaty & Fithra Faisal Hastiadi, 2017. "The Impact of Kyoto Protocol on Environment Quality in the Free Trade Era: Case of G20 Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 36-42.
    14. Jing Tian & Hua Liao & Ce Wang, 2015. "Spatial–temporal variations of embodied carbon emission in global trade flows: 41 economies and 35 sectors," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 78(2), pages 1125-1144, September.
    15. Muhammad Shahbaz, 2022. "Globalization–Emissions Nexus: Testing the EKC Hypothesis in Next-11 Countries," Global Business Review, International Management Institute, vol. 23(1), pages 75-100, February.
    16. Mutascu, Mihai, 2018. "A time-frequency analysis of trade openness and CO2 emissions in France," Energy Policy, Elsevier, vol. 115(C), pages 443-455.
    17. Pascalau, Razvan & Qirjo, Dhimitri, 2017. "TTIP and the Environmental Kuznets Curve," MPRA Paper 80192, University Library of Munich, Germany.
    18. Sylvanus Kwaku Afesorgbor & Binyam Afewerk Demena, 2022. "Trade Openness and Environmental Emissions: Evidence from a Meta-Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 81(2), pages 287-321, February.
    19. Shahbaz, Muhammad & Syed, Jawad & Kumar, Mantu & Hammoudeh, Shawkat, 2017. "Does globalization worsen environmental quality in developed economies?," MPRA Paper 80055, University Library of Munich, Germany, revised 06 Jul 2017.

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    More about this item

    Keywords

    Environmental Economics and Policy; International Relations/Trade;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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