Do Trade and Investment Flows Lead to Higher CO2 Emissions? Some Panel Estimation Results

Debashis Chakraborty () and Sacchidananda Mukherjee

No 1321, Working Papers from Indian Institute of Foreign Trade

Abstract: Over the last decade cross-country trade and investment flows have increased considerably, which is often linked to climate change concerns. The present analysis attempts to understand the influence of trade and investment flows on CO2 emissions through panel data model estimation for a set of 181 countries over 1990-2009. The empirical findings confirm that both in case of lower and higher income countries, higher merchandise trade growth in general and service and merchandise export growth in particular leads to the higher CO2 emission growth in their territories. Both FDI inward and outward stock is found to be positively related to CO2 emission, reflecting a complementary relationship between the two. The empirical results indicate that the composition, scale and technology effects significantly influence the trade-climate change interrelationship.

Keywords: environment and trade, foreign direct investment, climate change; democracy. (search for similar items in EconPapers)
JEL-codes: F21 Q56 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2013-08
New Economics Papers: this item is included in nep-ene, nep-env and nep-int
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