Journal Screenshot

International Journal of Academic Research in Accounting, Finance and Management Sciences

Open Access Journal

ISSN: 2225-8329

Relationship between Economic Growth, Trade and Environment: Evidence from D8 Countries

Abbas Rezazadeh Karsalari, Mohsen Mehrara, Maysam Musai, Mosa Mohammadi

http://dx.doi.org/10.6007/IJARAFMS/v4-i2/895

Open access

This paper investigates the causal relationship between environmental quality, economic growth and trade in D8 countries by using panel unit root tests and panel cointegration analysis for the period 1970-2011. The results suggest that there is a long-run relationship between these variables. Emissions have a positive long-run relationship with per capita income and trade. Moreover, the results show a unidirectional strong causality from economic growth to environment in these countries. We also find no causality between emissions and trade.

Asafu-Adjaye, J. (2000). the Relationship between Energy Consumption, Energy Prices and Economic Growth: Time Series Evidence from Asian Developing Countries, Energy Economics 22: 615–625.
Carvalho, F. (2012). Economic Development and Environmental Degradation in the era of Neoliberalism, PhD dissertation, Lund University, Department of Political Science, SIMV07.
Dean, J. (2002). “Does trade liberalization harm the environment? A new test” Canadian Journal of Economics, 35(4): 819-842.
Deardorff, A. V., and Robert, M. S. (2002). ‘What You Should Know about Globalization and the World Trade Organization’, Review of International Economics, 10 (3): 404-23.
Frankel, J. A., and Andrew, A. R. (2005). “Is trade good or bad for the Environment? Sorting out the Causality” Review of Economics and Statistics 87(1): 85-91.
Gale, L. R., and Mendez, J. A. (1998). "The empirical relationship between trade, growth and the environment," International Review of Economics & Finance. 7(1): 53-61.
Granger, C. W. J. (1969). Investigating Causal Relations by Econometric Models and Cross-spectral Methods, Econometrica 37 (3): 424-438.
Granger, C. W. J. (1988). Some Recent Developments in a Concept of Causality, Journal of Econometrics 39: 199–211.
Hansen, R. (2002). ‘Globalization, Embedded Realism, and Path Dependence’, Comparative Political Studies, 35 (3): 259-83.
Hatanaka, M. (1996). Time-Series-Based Econometrics: Unit Roots and Co-integration. Oxford University Press, Oxford.
Im, K. S., Pesaran, M. H., and Shin, Y. (1997). Testing for Unit Roots in Heterogeneous Panels, University of Cambridge, Department of Applied Economics.
Im, K. S., Pesaran, M. H., and Shin, Y. (2003). Testing for Unit Roots in Heterogeneous Panels, Journal of Econometrics 115: 53–74.
Jeffrey, A. F. (2003). The environment and globalization, NBER Working paper series, No.10090.
Jones, R. G., Murphy, J. M., and Noguer, M. (1995). Simulation of climate change over Europe using a nested regional-climate model. I: Assessment of control climate, including sensitivity to location of lateral boundaries. Q. J. R. Meteorol. Soc. 121:1413-1449.
Levin, A., Lin, C. F. (1992) Unit Root Tests in Panel Data: Asymptotic and Finite Sample Properties.Department of Economics, University of California at San Diego, Working Paper 92–23.
Levin, A., Lin, C. F. (1993). Unit Root Test in Panel Data: New Results. Department of Economics, University of California, San Diego, Working paper 93-56.
Levin, A., Lin, C. F., and Chu, C. S. J. (2002). Unit Root Test in Panel Data: Asymptotic and Finite Sample Properties. Journal of Econometrics 108: 1-24.
Lucas, R. E. B., Wheeler, D., and Hettige, H. (1992). “Economic Development, Environmental Regulation, and the International Migration of Toxic Industrial Pollution: 1960-1988.” In P. Low (Ed.), International Trade and the Environment, World Bank discussion paper No. 159.
Masih, A. M. M., Masih, R. (1996). Energy consumption, real income and temporal causality: results from a multi-country study based on cointegration and error-correction modeling techniques. Energy Economics 18:165–183.
Michael, D. I. (2003). Globalization of the world economy: potential benefits and costs and a net assessment, Globalization of the World Economy, January 2003, No. 33, www.milkeninstitute.org.
Najam, A., Runnalls, D., Halle, M. (2007). Environment and Globalization: Five Propositions, International Institute for Sustainable Development, working paper.
Nolan, P., and Zhang, J. (2003). ‘Globalization Challenge for Large Firms from Developing Countries: China’s Oil and Aerospace Industries’, European Management Journal, 21(3): 285- 99.
Pedroni, P. (1995). Panel Cointegration: Asymptotic and Finite Sample Properties of Pooled Time Series Tests, with an Application to the PPP Hypothesis. Indiana University, Working Papers in Economics, No. 95-013.
Pedroni, P. (1997). Panel Cointegration: Asymptotic and Finite Sample Properties of Pooled Time Series Tests, with an Application to the PPP Hypothesis: New results, India University, Working Papers in Economics.
Pedroni, P. (1999). Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors. Oxford Bulletin of Economics and Statistics 61 (4): 5–49.
Pedroni, P. (2004). Panel Cointegration: Asymptotic and Finite Sample Properties of Pooled Time Series Tests with an Application to the PPP Hypothesis: New Results. Econometric Theory 20 (3): 597–627.
Pesaran, M. H., Shin Y. (1997). An Autogressive Distributed Lag Modelling Approach to Cointegration Analysis, Working Paper Trinity College, Cambridge.
Peter, D. (2005). "Research in Global Environmental Politics: History and Trends," in Peter Dauvergne, ed., Handbook of Global Environmental Politics (Cheltenham, UK: Edward Elgar Publishing, 2005): ch. 2.
Wu, J., Li, Sh., Samsell, D. (2012). Why some countries trade more, some trade less, some trade almost nothing: The effect of the governance environment on trade flows, International Business Review, 21 (2012) 225–238.

In-Text Citation: (Karsalari et al., 2014)
To Cite this Article: Karsalari, A. R., Mehrara, M., Musai, M., & Mohammadi, M. (2014). Relationship between Economic Growth, Trade and Environment: Evidence from D8 Countries. International Journal of Academic Research in Accounting Finance and Management Sciences. 4(2), 419 – 428.