Trade Openness and CO2 Emissions: The Heterogeneous and Mediating Effects for the Belt and Road Countries

Abstract

To investigate whether increasing trade openness results in more severe environmental problems, this study investigates the impact of trade openness on carbon dioxide (CO2) emissions using panel data from 64 countries along the Belt and Road from 2001–2019. Fully considering the potential heterogeneity, the panel quantile regression approach is utilized. Moreover, this study explores the three major mediating effects of the process, namely the energy-substitution effect, economic effect, and technology effect. The empirical results indicate that the improvement in trade openness has a significantly positive effect on CO2 emissions, and it also shows that the impact varies with different levels of CO2 emissions. Furthermore, the indirect effect of trade openness on CO2 emissions via the economic effect is positive, while the indirect effect via the energy-substitution and the technology effect is negative. Therefore, it is necessary to improve renewable energy consumption, decrease energy intensity, and formulate related policies to reduce carbon emissions policies in terms of local conditions.

Using Quantile Regression to Analyze the Relationship between Socioeconomic Indicators and Carbon Dioxide Emissions in G20 Countries

“…In addition, there is consensus in the research community that increased fossil fuel consumption is coupled with increased CO 2 emissions [31,43], which this study confirms as well. Finally, this study revealed that increased trade openness is associated with reduction in CO 2 emissions, which agrees with the work by Chen et al [25] on data from G20 countries and by Dogan and Turkekul [31] on USA, and disagrees with another work on 64 countries [44]. Our interpretation to this variation is that trade openness impact on CO 2 emissions is related to the nature of goods and services being imported and exported and their impact on the environment.…”

Dose Remittances Matter for Openness and Financial Stability: Evidence From Least Developed Economies

“…These sources are either aggregated economic figures (de-facto measures) or evaluations of economic transparency's structural basis, i.e., lawfully defined obstacles to exchange and financial transactions. Addressing economic openness in literature, two lines of the study available are one group of researchers have considered total trade as a percentage of GDP as a measure of EO, see Fujii ( 2019 ) and Chen et al ( 2021 ), and simultaneously another line of study has been considering FDI inflows as a measured of EO, see Steiner and Saadma ( 2016 ), Baltagi et al ( 2009 ). Furthermore, financial openness is classified according to three regimes (closed, neutral, or open) based on the KAOPEN financial openness indicator of Chinn and Ito ( 2008 ).…”

Examining the Relationship Between Energy Consumption, Economic Growth and Environmental Degradation in Indonesia: Do Capital and Trade Openness Matter?

“…Other studies including gross capital formation Zhang et al, 2021). However, studies on the relationship between energy consumption, economic growth, and environmental degradation/CO2 emissions with the inclusion of gross capital formation and trade openness simultaneously are lacking in the existing literature and needs to receive more attention in empirical analysis in the future (for example, Chen et al, 2021;Ling et al, 2015;Ekundayo Peter Mesagan & Nwachukwu, 2018;Rauf et al, 2018;Soytas et al, 2007). One corresponding study by Rauf et al (2018) found that energy consumption, economic growth, and gross capital formation positively influence CO2 emissions, while trade openness and CO2 emissions are negatively connected by applying fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) data from 47 of Belt and Road Initiative (BRI) countries.…”

“…There is limited literature on the relationship between energy consumption, economic growth, and environmental degradation/CO2 emissions with the inclusion of gross capital formation and trade openness simultaneously (Chen et al, 2021;Ling et al, 2015;Ekundayo Peter Mesagan & Nwachukwu, 2018;Rauf et al, 2018).…”