Trade Openness, Economic Growth, and Environmental Degradation in Asian Developing Countries

Abstract

This paper examines the effects of trade openness and economic growth on CO2 emission using a theoretical trade model. The theoretical results indicate that an increase in trade openness intensifies environmental degradation, while an increase in imports may result in advancement of technology that has positive effect on environmental quality, implying a possible existence of the Environmental Kuznets Curve (EKC). This paper explores these findings using panel data framework based on annual data from Asian developing countries (1986-2013). The empirical results show that trade openness and economic growth intensify CO2 emission. However, the results do not validate the EKC.