The role of trade openness and investment in examining the energy-growth-pollution nexus: Empirical evidence for China and India

Duc Khuong Nguyen, Benoît Sévi, Bo Sjö and Gazi Uddin

MPRA Paper from University Library of Munich, Germany

Abstract: Most of the existing literature dealing with the relationship between carbon emissions, energy consumption and economic growth either suffers from ignoring relevant variables such as trade openness or investment, or suffers from using econometric methods that are unable to distinguish between short and long-term causality and are not robust to the degree of integration of time series used for the analysis. This paper suggests using the autoregressive distributed lag (ARDL) approach along with additional explanatory variables such as measures of trade and investment to shed a new light on the link between emissions, energy consumption and income in the two largest and energy-intensive developing economies: China and India. Our results, over the 1971-2009 period, provide evidence that investment plays a major role in shaping the relationship between carbon emissions, energy consumption and income in China while this is not the case in India. Furthermore, trade openness is found to play a key function in the short-term in China but does not contribute to the emissions-energy-growth scenario in India.

Keywords: Energy; carbon emissions; income; ARDL approach; India; China. (search for similar items in EconPapers)
JEL-codes: Q43 Q53 Q56 (search for similar items in EconPapers)
Date: 2015-09, Revised 2016-12
New Economics Papers: this item is included in nep-ene and nep-env
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Journal Article: The role of trade openness and investment in examining the energy-growth-pollution nexus: empirical evidence for China and India (2017)
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