THE NEXUS BETWEEN TRADE OPENNESS AND ENVIRONMENTAL DEGRADATION : A VECM ANALYSIS
Keywords:
EKC, Environment, ICT, Income, Trade OpennessAbstract
This research aimed to analyze the influence of trade openness, ICT, per capita income, and Human Development Index on environmental quality in Upper-Middle Income countries in the short and long term and how per capita income influenced environmental quality in the U-shaped EKC hypothesis in Upper-Middle Income countries over the 1990-2020 periods using the VECM Panel analysis. Several findings were revealed in this research. First, the coefficient of trade openness in the long-term and short-term on environmental quality was positive and statistically significant at the 1% level. Second, the relationship between ICT and environmental quality had a positive influence in the short term and a negative influence in the long term. Third, the relationship between per capita income and environmental quality positively influenced the long- and short-term. In these findings, an increase in per capita income increased carbon dioxide, which caused a decrease in environmental quality and emerged an inverted U relationship in the long- and short-term of the EKC hypothesis in UMI countries, with the turning point in the short-term being US$ 728,530 and in the long-term US$ 772,839. Finally, the Human Development Index in this research positively influences environmental quality in the short- and long-term. The outcomes of this study have considerable Policy implications regarding trade openness policy formulation to reduce environmental degradation, especially in Upper Middle-Income Countries.
Downloads
References
Afzal Hossain dan Songsheng Chen. (2021). Nexus between Human Development Index (HDI) and CO2 emissions in a developing country: decoupling study evidence from Bangladesh. Environmental Science and Pollution Research.
Akbar, M., Hussain, A., (2021). The dynamic association between healthcare spending, CO2 emissions, and human development index in OECD countries: evidence from panel VAR model. Environ Dev Sustain 23, 10470–10489. https://doi.org/10.1007/s10668-020-01066-5
Akbar, M., Hussain, A., (2021). The dynamic association between healthcare spending, CO2 emissions, and human development index in OECD countries: evidence from panel VAR model. Environ Dev Sustain 23, 10470–10489. https://doi.org/10.1007/s10668-020-01066-5
Akca, Hasim. Environmental Kuznets Curve and financial development in Turkey: evidence from augmented ARDL approach. (2021). Environmental Science and Pollution Research Aims and scope.
Ansari, M. A., & Khan, N. A. (2021). Decomposing the trade-environment nexus for high income, upper and lower middle income countries: What do the composition, scale, and technique effect indicate? Ecological Indicators, 121(September 2020), 107122. https://doi.org/10.1016/j.ecolind.2020.107122
Ansari, M. A., & Khan, N. A. (2021). Decomposing the trade-environment nexus for high income, upper and lower middle income countries: What do the composition, scale, and technique effect indicate? Ecological Indicators, 121(September 2020), 107122. https://doi.org/10.1016/j.ecolind.2020.107122
Antweiler, W., Copeland, B. R., & Taylor, M. S. (2001). Is free trade good for the environment? American Economic Review, 91(4), 877–908. https://doi.org/10.1257/aer.91.4.877
Assa, J. (2021). Less is more: The implicit sustainability content of the human development index. Ecological economics.
Azam Muhammad, Abdul Qayyum Khan. (2016). Testing the Environmental Kuznets Curve hypothesis: A comparative empirical study for low, lower middle, upper middle and high income countries. Renewable and Sustainable Energy Reviews
Brack, D. (2019). Trade and the environment. Trade Politics, Second Edition, January 2008, 1–330. https://doi.org/10.4324/9780429486722-19
Chhabra, Megha., Arun Kumar Giri., Arya Kumar. (2023). Do trade openness and institutional quality contribute to carbon emission reduction? Evidence from BRICS countries. Environmental Science and Pollution Research.
Cole, M. A. (2004). Trade, the pollution haven hypothesis and the environmental Kuznets curve: Examining the linkages. Ecological Economics, 48(1), 71–81. https://doi.org/10.1016/j.ecolecon.2003.09.007
Danish, Khan, N., Baloch, M.A., Saud, S., Fatima, T., 2018. The effect of ICT on CO2 emissions in emerging economies: does the level of income matters? Environ. Sci. Pollut. Res. 25, 22850–22860. https://doi.org/10.1007/s11356- 018-2379-2
Ebert, U., & Welsch, H. (2007). Environmental emissions and production economics: Implications of the materials balance. American Journal of Agricultural Economics, 89(2), 287–293. https://doi.org/10.1111/j.1467-8276.2007.00997.x
Engstrom, E., & Kolk, M. (2023). Projecting Environmental Impacts with varying Population, Affluence, and Technology using IPAT – Climate Change and Land Use Scenarios.
Farhani, S., Mrizak, S., Chaibi, A., & Rault, C. (2014). The environmental Kuznets curve and sustainability: A panel data analysis. Energy Policy, 71(2008), 189–198. https://doi.org/10.1016/j.enpol.2014.04.030
Greene, William H., 2003, Econometric Analysis, Fifth Edition, New Jersey, Prentice-Hall
Greenstone, Michael, and Rema Hanna. (2014). Environmental Regulations, Air and Water Pollution, and Infant Mortality in India. American Economic Review, 104 (10): 3038-72.
Gujarati, Damodar N. dan Dawn C. Porter. (2012). Dasar-dasar Ekonometrika Buku 2. Edisi 5. Raden Carlos Mangunsong (penj.). Jakarta: Salemba Empat
Isaac Appiah-Otoo, Alex O. Acheampong, Xudong Chen. (2022). The impact of information and communication technology (ICT) on carbon dioxide emissions: Evidence from heterogeneous ICT countries. Energy & Environment
Isik, C., Ongan, S., & Ozdemir, D. (2019). Testing the EKC hypothesis for ten US states: an application of heterogeneous panel estimation method. Environmental Science and Pollution Research, 26(11), 10846–10853. https://doi.org/10.1007/s11356-019-04514-6
Islam, M.S., Rahaman, S.H. (2023). The asymmetric effect of ICT on CO2 emissions in the context of an EKC framework in GCC countries: the role of energy consumption, energy intensity, trade, and financial development. Environ Sci Pollut Res 30, 77729–77741. https://doi.org/10.1007/s11356-023-27590-1
Islam, M.S., Rahaman, S.H. (2023). The asymmetric effect of ICT on CO2 emissions in the context of an EKC framework in GCC countries: the role of energy consumption, energy intensity, trade, and financial development. Environ Sci Pollut Res 30, 77729–77741. https://doi.org/10.1007/s11356-023-27590-1
Islam, MS, Rahaman, SH, Rehman, A ur, & Khan, I. (2023). ICT's impact on CO2 emissions in GCC region: the relevance of energy use and financial development. Energy Strategy Reviews
Malmodin, J., Lovehagen, N., Bergmark, P., Lunden, D. (2024). ICT sector electricity consumption and greenhouse gas emissions – 2020 outcome. Telecommunications Policy. https://doi.org/10.1016/j.telpol.2023.102701.
Katar, S., & Anil, S. (2007). Environmental Economics: Theory and Applications. SAGE Publications.
Khan, M. T. I., Yaseen, M. R., & Ali, Q. (2017). Dynamic relationship between financial development, energy consumption, trade and greenhouse gas: Comparison of upper middle income countries from Asia, Europe, Africa and America. Journal of Cleaner Production, 161, 567–580. https://doi.org/10.1016/j.jclepro.2017.05.129
Lako, A. (2015). Menghijaukan Ekonomi Bisnis dan Akuntansi. Erlangga, 110, 1–8.
Lee JW, Brahmasrene T (2013) Investigating the influence of tourism on economic growth and carbon emissions: evidence from panel analysis of the European Union. Tour Manag 38:69–76
Levinson, A., & Taylor, M. S. (2008). Unmasking the pollution haven effect. International Economic Review, 49(1), 223–254. https://doi.org/10.1111/j.1468-2354.2008.00478.x
Li, Y, & Zhang, Y. (2023). What is the role of green ICT innovation in lowering carbon emissions in China? A provincial-level analysis. Energy Economics.
Lv, Z., & Xu, T. (2019). Trade openness, urbanization and CO 2 emissions: Dynamic panel data analysis of middle-income countries. Journal of International Trade and Economic Development, 28(3), 317–330. https://doi.org/10.1080/09638199.2018.1534878
Magazzino, Cosimo and Porrini, Donatella and Fusco, Giulio and Schneider, Nicolas, Investigating the Link Among ICT, Electricity Consumption, Air Pollution, and Economic Growth in EU Countries (2021). Energy Sources, Part B: Economics, Planning, and Policy, 2021, DOI: 10.1080/15567249.2020.1868622
Mahmood, H., Adow, A. H., Abbas, M., Iqbal, A., Murshed, M., & Furqan, M. (2022). The Fiscal and Monetary Policies and Environment in GCC Countries: Analysis of Territory and Consumption-Based CO2 Emissions. Sustainability (Switzerland), 14(3). https://doi.org/10.3390/su14031225
Mahmood, H., Adow, A. H., Abbas, M., Iqbal, A., Murshed, M., & Furqan, M. (2022). The Fiscal and Monetary Policies and Environment in GCC Countries: Analysis of Territory and Consumption-Based CO2 Emissions. Sustainability (Switzerland), 14(3). https://doi.org/10.3390/su14031225
Martinot, E., Chaurey, A., Lew, D., Moreira, J. R., & Wamukonya, N. (2002). Renewable energy markets in developing countries. Annual Review of Energy and the Environment, 27, 309–348. https://doi.org/10.1146/annurev.energy.27.122001.083444
Miniesy, R. S., & Tarek, M. (2019). Is there evidence of PHH in developing Asia? Journal of Chinese Economic and Foreign Trade Studies, 12(1), 20–39. https://doi.org/10.1108/JCEFTS-06-2018-0018
Negro, S. O., Alkemade, F., & Hekkert, M. P. (2012). Why does renewable energy diffuse so slowly? A review of innovation system problems. Renewable and Sustainable Energy Reviews, 16(6), 3836–3846. https://doi.org/10.1016/j.rser.2012.03.043
Pervaiz, R., Faisal, F., Rahman, S.U. et al. (2021). Do health expenditure and human development index matter in the carbon emission function for ensuring sustainable development? Evidence from the heterogeneous panel. Air Qual Atmos Health 14, 1773–1784. https://doi.org/10.1007/s11869-021-01052-4
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Tania Wicaksana, Wahyu Widodo
This work is licensed under a Creative Commons Attribution 4.0 International License.
