Unraveling the environmental consequences of trade openness in South Africa: a novel approach using ARDL modeling

Abstract

Free trade and environmental sustainability are currently top economic and environmental research priorities. While numerous theories connect trade openness with environmental quality, empirical evidence often fails to support these claims. Using data spanning from 1980 to 2020, our study examines the effect of trade openness on CO2 emissions in South Africa. By employing a novel ARDL modeling framework, our analysis confirms the presence of the Environmental Kuznets Curve (EKC) hypothesis in South Africa. Our findings reveal that while GDP square enhances environmental quality, trade openness and economic growth have a degrading effect over time. Additionally, the study identifies that energy consumption, FDI, and value-added activities all contribute to environmental degradation. Findings also highlights the influence of institutional quality on the environment, demonstrating that political stability and control of corruption lead to increased CO2 emissions, while the rule of law reduces CO2 emissions. The research suggested that the potential of green economies should be leveraged in developing renewable energy, sustainable development, the recycling industry, and green financing sectors. A shift in economic activity in this direction will thus foster long-term economic growth and sustainable development.

The relationship between urbanization, energy consumption, economic growth, and carbon dioxide emissions in middle eastern countries: Saudi Arabia, Jordan and Egypt

“…Additionally, economic policies in both countries are related directly to the International Monetary Fund. These findings correspond with those of Samargandi [92], Taher and Hajjar [93], Lanhui & Ibrahim [94] and Raggad [45], who have previously stated that economic growth increases CO 2 emissions in Saudi Arabia. Recent studies from Egypt, such as Raihan et al [95], and Adebayo & Kalmaz [75], confirm that economic growth stimulates CO 2 emissions, leading to environmental degradation.…”