Carbon emissions effect of trade openness and energy consumption in Sub-Saharan Africa

Alper Yılmaz ()
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Alper Yılmaz: Aydın Adnan Menderes University

SN Business & Economics, 2023, vol. 3, issue 2, 1-28

Abstract: Abstract Human-induced global warming and climate change are the greatest threat that we have ever faced. In parallel, the greater trade liberalization, energy usage and higher pollution intensities, therefore, raise questions about the climate impacts of trade liberalization and energy consumption. To find out the environmental effects of trade and energy factors, there are a considerable number of papers in the literature. Correspondingly, we explore the role of trade openness and energy usage on carbon emission (CO2) for 30 Sub-Saharan African (SSA) countries based on 1980–2018 yearly data. For this purpose, we apply the Granger causality test and cointegration approach in panel data estimation methodology. The main findings of interest in this paper are the existence of a cointegration relationship and one-way causality between variables in the long run both according to the Vector Error Correction Model (VECM) and Granger causality analysis. As anticipated, energy use has a significant long-run effect on rising carbon emissions. On the other hand, the study finds positive bi-directional causality between trade openness and carbon emissions. The country will have the chance to avoid the negative effects of these two factors on the environment and achieve its goals if enough consideration is given when developing trade and energy policies (for example, the rate of increase in energy consumption is stable and the transition to green energy is accelerated, the trade policies transform the country’s industry into a view where the share of polluting industries is reduced and less energy-dense modern technologies are used).

Keywords: Panel data analysis; Trade policy; Trade and environment; Energy and environment; Government policy (search for similar items in EconPapers)
JEL-codes: C23 F13 F18 P18 Q58 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s43546-022-00380-6

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