The Impact of Trade Openness on Carbon Emissions: Empirical Evidence from Emerging Countries

Rui Zhou, Shu Guan and Bing He ()
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Rui Zhou: The Institute of Regional Modernization, Jiangsu Provincial Academy of Social Sciences, Nanjing 210004, China
Shu Guan: The Institute of Regional Modernization, Jiangsu Provincial Academy of Social Sciences, Nanjing 210004, China
Bing He: School of Business, Jiangsu Ocean University, Lianyungang 222005, China

Energies, 2025, vol. 18, issue 3, 1-21

Abstract: Emerging countries are the main source of new CO 2 emissions and the major net carbon importers, and they have also become an important part of the global trade pattern. In this study, the impact of trade openness on CO 2 emissions was investigated by approaches such as fully modified least squares (FMOLS), dynamic ordinary least squares (DOLS), and pooled mean group-autoregressive distributive lag (PMG-ARDL) methods. Further estimations were conducted by employing methods such as DCCEMG (dynamic common-correlated effect mean group) and Driscoll–Kray to strengthen the robustness of the results. Moreover, the Granger causality between trade openness and CO 2 emissions was tested by using the Dumitrescu–Hurlin method. Conclusions can be drawn as follows: First, economic growth, energy consumption, trade openness, and CO 2 emissions are all interconnected in the long term. Specifically, higher levels of economic growth and trade openness are associated with lower CO 2 emissions, whereas energy consumption contributes to higher emissions. However, in the short term, economic growth and energy consumption lead to an increase in CO 2 emissions, while trade openness does not have a significant impact. Moreover, there is a two-way Granger causality between trade openness and CO 2 emissions. Additionally, economic growth and energy consumption have an indirect effect on CO 2 emissions by influencing trade openness. Given these findings, emerging market countries should focus on enhancing their service sectors, promoting technological advancements, and fostering international collaboration in green technologies. By actively engaging in efforts to combat climate change, these countries reach a point where trade expansion and carbon reduction are achieved.

Keywords: trade openness; CO 2 emissions; emerging countries; energy consumption; trade expansion; carbon reduction (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2025
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