Dynamics of international trade, technology innovation and environmental sustainability: evidence from Asia by accounting for cross-sectional dependence

Usman Ali, Yanxi Li, Verónica Patricia Yánez Morales and Babar Hussain

Journal of Environmental Planning and Management, 2021, vol. 64, issue 10, 1864-1885

Abstract: This study explores the mechanism of how trade openness (TO) affects CO2 emissions via the scale and technique effects in the Asian region over the 1990–2015 period. The results obtained by employing cross-sectional augmented estimators indicate that: (i) trade-induced technology innovation (TI) reduces CO2 emissions; (ii) trade-facilitated economic growth results in higher CO2 emissions; (iii) the positive scale effect outweighs the negative technique effects. Furthermore, TO also produces a rebound effect of TI on emissions for Southern and Western Asia. The Dumitrescu–Hurlin causality test reveals that TO Granger causes economic growth and TI, which in turn cause CO2 emissions. Besides, quadri-directional causality is observed between TO, TI, energy consumption and emissions, suggesting that these variables are mutually reinforcing. The findings suggest that the goals of environmental sustainability can be attained if the pace of national output growth is accompanied by environmental regulations and clean technology improvements when framing comprehensive trade policy.

Date: 2021
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:taf:jenpmg:v:64:y:2021:i:10:p:1864-1885

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DOI: 10.1080/09640568.2020.1846507

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