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Trade openness and environmental quality. Evidence from 24 Asia-Pacific economies (1995-2016)

By Le Bui Xuan Dung (VNP 23)

Supervisor: Prof. Peter van Bergeijk

Dr. Pham Khanh Nam

Abstract:

Due to the inconclusive literature on the trade openness-environmental quality nexus as well as the research gap in the environmental effect of trade openness for the Asia-Pacific region specifically, this study aims at analysing the environmental influence of trade openness in 24 Asia-Pacific economies over the period 1995-2016. Furthermore, evidences from new trade openness measures, namely Export values index and Trade freedom Index, are provided alongside the traditional trade volumes. Employing Fixed Effects estimator for panel data to examine the direct connection between international trade openness and carbon dioxide emissions, this research found no strong evidence from the extended STIRPAT model for either gains-from-trade effect or race-to-the-bottom effect across three trade openness proxies used. While the trade volumes show significantly positive yet inconsistent emissions effect, exports value and trade openness policy measures have no impact on the emissions level. Other more relevant determinants of carbon dioxide emissions for the region are urbanization, per capita income, renewable energy consumption, capital abundance, and financial development.

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