The Relationship between Trade Liberalization, Financial Development and Carbon Dioxide Emission—An Empirical Analysis
Abstract
:1. Introduction
2. Literature and Hypothesis
2.1. Trade Liberalization and Carbon Dioxide Emissions
2.2. Financial Development and Carbon Dioxide Emissions
2.3. Trade Liberalization and Financial Development
3. Model Setting and Data Description
3.1. PVAR Model
3.2. Data Description
3.3. Technology Effect on CO2 Emission
3.4. SFA Model
- Y: innovation output (pieces);
- K: R&D capital stock;
- L: Personnel input in regional R&D activities;
- TRL: Regional trade liberalization level;
- ER: Environmental regulation variables;
4. Results and Discussion
4.1. Descriptive Statistics Analysis
4.2. Panel Unit Root Test
4.3. PVAR Evaluation
4.3.1. Lagging Items Screening
4.3.2. PVAR Evaluation Results
4.4. Variance Decomposition
4.5. Granger Causality Test
4.6. Technology Innovation Effect on Carbon Dioxide Emissions
4.7. Technology Innovation Effect on Trade Liberation
5. Conclusions and Policy Recommendations
6. Limitations and Future Recommendations
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
References
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Author | Variables | Method | Conclusion | Countries |
---|---|---|---|---|
Stephen (2021) [2] | CO2, FD, TR | DOLS, FMOLS | TR and FD contribute to CO2; EC mitigates CO2 | Turkey and the Caspian countries |
Pardyot (2018) [3] | CO2, SO2, NO2, SPM, FD, TR | Panel regression analysis | FD contributes to NO2, TR mitigates CO2, SMP, SO2 | India |
Gulzara (2018) [4] | FDI, FD, TR, CO2 | ARDL | FDI, TR contributes to CO2, | Pakistan and India |
Dennis (2019) [5] | TR, GDP, Pollution, | SLM | TR and GDP mitigate Pollution | 183 countries |
Eyup (2016) [6] | TR, FD, NREC, REC | CADF, CIPS, Heterogeneous panel | TR, FD and REC mitigate CO2; NREC contributes to CO2 | European countries |
Mehmood (2020) [7] | CO2, TR | Co-integration, Unit root test | TR contributes to CO2 | South Asia countries |
Haider (2018) [8] | CO2, TR | Unit root analysis, ARDL | EGY contributes to CO2 | Tunisia |
Mahmood (2017) [9] | CO2, TR | Cointegration | TR mitigates CO2 | Saudi Arabia |
Shahbaz (2017) [10] | CO2, TR, | Causality | TR contributes to CO2 | 105 countries |
Kizito (2018) [11] | FD, TR, GDP | Panel unit root test, cointegration test | FD contributes to TR, GDP; TR contributes to FD, GDP | Nigeria and South Africa |
Hélde (2020) [12] | TR, CO2, FD, GDP | DOLS FMOLS, DOLS | GDP contributes to CO2, CO2 and TR contribute to FD | Brazil |
Energy | Coal | Coke | Crude Oil | Kerosene | Fuel | Gasoline | Diesel | Natural Gas |
---|---|---|---|---|---|---|---|---|
αi | 0.756 | 0.855 | 0.586 | 0.571 | 0.619 | 0.554 | 0.592 | 0.448 |
βi | 0.714 | 0.971 | 1.429 | 1.471 | 1.429 | 1.471 | 1.457 | 1.330 |
Ei | 0.942 | 0.4653 | 1.4286 | 1.4714 | 1.4714 | 1.428 | 1.4571 | 1.757 |
Variable | lnCO2 | lnTR | lnFD |
---|---|---|---|
Observations | 1000 | 1000 | 1000 |
The Average | 4.82 | −2.43 | 18.54 |
Standard Error | 9.89 | 0.68 | 25.38 |
The Minimum Value | 8.01 | −2.13 | 18.65 |
The Maximum | 0.86 | 1.68 | 1.76 |
Variable | LLC Test | IPS Test | |||
---|---|---|---|---|---|
Constant Term | Trend and Constant Terms | Constant Term | Trend and Constant Terms | ||
The Level | lnCO2 | −0.0298 ** | −0.2862 *** | 1.325 ** | −1.438 *** |
lnFD | −0.2318 ** | −0.1839 ** | −2.136 ** | 1.462 ** | |
lnTR | −0.1836 * | −0.2736 *** | −0.416 ** | −1.428 ** | |
A First Order Differential | lnCO2 | −0.8654 ** | −1.3584 *** | −7.652 *** | −6.864 ** |
lnFD | −0.7826 ** | −0.9128 *** | −6.648 ** | −7.126 *** | |
lnTR | −0.8012 *** | −1.358 ** | −8.165 ** | −5.864 ** |
Lag | AIC | BIC | HQIC |
---|---|---|---|
1 | −5.7624 | −5.2346 * | −6.2345 ** |
2 | −5.6219 | −5.0138 | −5.4326 |
3 | −5.5628 *** | −4.4316 | −5.6138 |
4 | −5.3129 *** | −4.2364 ** | −5.6183 ** |
h_lnCO2 | h_lnFD | h_lnTR | |
---|---|---|---|
L.h_lnCO2 | 1.912 *** (2.39) | 0.068 ** (0.196) | −0.023 (−0.17) |
L.h_lnFD | 0.218 ** (0.783) | 0.624 ** (1.86) | 0.723 ** (0.65) |
L.h_lnTR | −0.023 ** (−0.18) | −0.076 *** (−1.96) | 1.126 *** (3.86) |
L2.h_lnCO2 | −0.216 (−1.36) | 0.076 ** (1.46) | −0.516 (−0.42) |
L2.h_lnFD | 0.054 ** (0.38) | −0.204 (−1.54) | −0.286 ** (−0.68) |
L2.h_lnTR | 0.014 ** (0.23) | 0.027 * (2.19) | −0.321 *** (−1.54) |
L3.h_lnCO2 | 0.236 *** (0.56) | 0.048 *** (1.29) | 0.064 ** (0.44) |
L3.h_lnFD | 0.238 ** (1.41) | 0.312 ** (0.71) | −0.254 ** (−1.54) |
L3.h_lnTR | 0.184 (1.42) | 0.039 ** (1.74) | 0.154 ** (2.12) |
L4.h_lnCO2 | −0.108 ** (−0.48) | −0.065 * (−0.37) | −0.224 (−1.86) |
L4.h_lnFD | 0.018 (0.12) | −0.064 (−0.22) | 0.264 (0.754) |
L4.h_lnTR | −0.178 (−1.54) | 0.116 ** (1.14) | −0.122 *** (−1.46) |
lnCO2 | lnFD | lnTR | |
---|---|---|---|
lnCO2 | 0.813 | 0.046 | 0.118 |
lnFD | 0.634 | 0.314 | 0.112 |
lnTR | 0.132 | 0.026 | 0.513 |
lnCO2 | 0.584 | 0.026 | 0.038 |
lnFD | 0.664 | 0.038 | 0.126 |
lnTR | 0.178 | 0.038 | 0.882 |
Variable | Causal Relationship | Chi-Square Value | p Values |
---|---|---|---|
lnCO2 | lnFD is not the cause | 27.124 | 0.003 |
lnTR is not the cause | 4.436 | 0.246 | |
ALL | 47.238 | 0.012 | |
lnFD | lnCO2 is not the cause | 17.241 | 0.003 |
lnTR is not the cause | 25.132 | 0.001 | |
ALL | 43.218 | 0.002 | |
lnTR | lnCO2 is not the cause | 6.2413 | 0.026 |
lnFD is not the cause | 12.746 | 0.022 | |
ALL | 23.244 | 0.002 |
Variable | Model 1 | Model 2 |
---|---|---|
lnL | 1.4654 *** (1.51) | 1.3126 *** (2.24) |
lnK | −1.8846 *** (−3.42) | −3.0126 *** (−2.43) |
lnL2 | 0.6428 *** (3.08) | 0.8126 ** (1.27) |
lnK2 | 0.6542 *** (2.08) | 0.6834 *** (1.96) |
lnKxlnL | −0.7326 *** (−3.14) | −0.7135 ** (−1.62) |
Constant term | 7.1236 *** (5.14) | 8.2431 *** (4.36) |
σ | 0.3214 ** (3.89) | 0.1324 *** (10.28) |
γ | 0.5238 *** (12.76) | 0.6852 ** (2.16) |
Log | −96.2364 | −142.3548 |
Likelihood Ratio (LR) | 284.316 | 201.261 |
Explanatory Variable | Model 1 | Model 2 | Model 3 | Model 4 | Model 5 | Model 6 |
---|---|---|---|---|---|---|
TRL | −0.7938 ** (−2.94) | −1.2635 *** (−5.12) | −0.7836 *** (−3.13) | −1.3245 ** (−6.14) | −1.8234 *** (−4.63) | −1.8642 *** (−5.24) |
ER | −0.0016 ** (−1.83) | 0.008 * (2.64) | −0.0186 ** (−5.65) | −0.0345 ** (−2.31) | −0.0038 *** (−1.89) | −0.0084 ** (−3.41) |
ST | 53.3126 *** (4.36) | 35.6214 *** (9.21) | 51.2354 *** (8.14) | 7.2142 ** (2.58) | 28.3126 *** (8.38) | 23.1264 *** (7.68) |
SCH | −1.3842 ** (−1.85) | −0.2435 * (−1.15) | −0.1462 ** (−1.69) | 0.1327 * (0.96) | −0.0125 * (−0.28) | 0.0256 * (0.84) |
GDPPC | −0.2135 * (−0.65) | −0.1328 ** (−1.94) | −0.1564 ** (0.37) | −0.1625 ** (−1.38) | −0.1628 ** (−2.42) | −0.1832 * (−4.16) |
lnFDI | −0.1245 *** (−2.46) | 0.0186 * (0.54) | 0.0846 ** (1.37) | −0.2438 ** (−3.46) | −0.0628 ** (−1.86) | −0.0542 ** (−1.68) |
TRL2 | 0.6254 ** (2.57) | 0.8654 *** (4.56) | 0.8321 ** (2.46) | |||
ER2 | 0.0004 *** (5.18) | 0.0013 ** (2.41) | 0.0008 ** (4.28) | |||
ER × TRL | 0.0116 ** (0.64) | |||||
ER × TRL2 | 0.0285 ** (2.16) | |||||
ER2 × TRL | 0.0011 ** (1.32) | |||||
Constant | 2.4268 ** (2.34) | 0.8854 ** (3.18) | 1.6824 *** (1.98) | 1.2454 ** (1.65) | 0.9245 ** (2.14) | 0.8324 ** (2.34) |
Observed Value | 690 | 690 | 690 | 690 | 690 | 690 |
σ2 | 0.2245 *** (6.48) | 0.1768 ** (13.46) | 0.1589 ** (8.24) | 0.2345 ** (3.76) | 0.1158 *** (8.42) | 0.1254 ** (1.74) |
r | 0.2546 ** (1.35) | 0.6824 *** (10.74) | 0.1948 ** (2.17) | 0.4326 *** (6.18) | 0.5342 *** (1.86) | 0.6218 *** (1.53) |
Log | −152.4856 | −137.5246 | −131.8426 | −151.2164 | −130.4258 | −114.2376 |
Likelihood Ratio (LR) | 98.1354 | 123.4526 | 118.5424 | 86.2354 | 146.2345 | 114.3219 |
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Duan, K.; Cao, M.; Abdul Kader Malim, N. The Relationship between Trade Liberalization, Financial Development and Carbon Dioxide Emission—An Empirical Analysis. Sustainability 2022, 14, 10308. https://doi.org/10.3390/su141610308
Duan K, Cao M, Abdul Kader Malim N. The Relationship between Trade Liberalization, Financial Development and Carbon Dioxide Emission—An Empirical Analysis. Sustainability. 2022; 14(16):10308. https://doi.org/10.3390/su141610308
Chicago/Turabian StyleDuan, Keyi, Mingyao Cao, and Nurhafiza Abdul Kader Malim. 2022. "The Relationship between Trade Liberalization, Financial Development and Carbon Dioxide Emission—An Empirical Analysis" Sustainability 14, no. 16: 10308. https://doi.org/10.3390/su141610308