Environmental Effects of Commodity Trade vs. Service Trade in Developing Countries
Abstract
:1. Introduction
2. Literature Review
- CO2 emissions are positively associated with trade volume.
- Commodity trade contributes to higher levels of CO2 emissions than service trade.
3. Methodology
3.1. Empirical Model
3.2. Data Description
3.3. Estimation Technique
4. Empirical Results and Discussion
4.1. Results Pertaining to Key Variables of Interest
4.2. Results Pertaining to Control Variables
4.3. Study Limitations and Future Prospects
5. Summary, Conclusions, and Policy Implications
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Acknowledgments
Conflicts of Interest
Appendix A
Afghanistan | South Sudan | Kazakhstan | Romania |
Albania | Chile | Kenya | Russian Federation |
Algeria | China | Kiribati | Rwanda |
Angola | Colombia | Sri Lanka | Samoa |
Antigua and Barbuda | Comoros | Liberia | Sao Tome and Principe |
Argentina | Congo, Dem. Rep. | Libya | Saudi Arabia |
Armenia | Costa Rica | Madagascar | Senegal |
Aruba | Djibouti | Malawi | Serbia |
Azerbaijan | Dominica | Malaysia | Seychelles |
Bahamas | Dominican Republic | Maldives | Sierra Leone |
Bahrain | Ecuador | Mali | Solomon Islands |
Bangladesh | Egypt | Marshall Islands | Somalia |
Barbados | El Salvador | Mauritania | South Africa |
Belarus | Equatorial Guinea | Mauritius | St. Kitts and Nevis |
Belize | Eritrea | Mexico | St. Lucia |
Benin | Eswatini | Moldova | St. Vincent and the Grenadines |
Bhutan | Ethiopia | Mongolia | Sudan |
Bolivia | Fiji | Montenegro | Suriname |
Bosnia and Herzegovina | Gabon | Morocco | Syria |
Botswana | The Gambia | Mozambique | Tajikistan |
Brazil | North Macedonia | Namibia | Tanzania |
Brunei Darussalam | Georgia | Nauru | Thailand |
Bulgaria | Ghana | Nepal | Togo |
Burkina Faso | Grenada | Nicaragua | Tonga |
Burundi | Guatemala | Niger | Trinidad and Tobago |
Cabo Verde | Guinea-Bissau | Oman | Turkey |
Cambodia | Guyana | Panama | Turkmenistan |
Cameroon | Haiti | Pakistan | Tuvalu |
Central African Republic | Honduras | Palau | Tunisia |
Chad | India | Papua New Guinea | Uganda |
Kosovo | Indonesia | Paraguay | Ukraine |
Kuwait | Iran | Peru | Uruguay |
Kyrgyzstan | Iraq | Philippines | Uzbekistan |
Laos | Jamaica | Poland | Vanuatu |
Lebanon | Jordan | Nigeria | Vietnam |
Lesotho | Guinea | Qatar | Venezuela |
Yemen | Zambia | Zimbabwe |
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Title and Author(s) | Objectives | Results and Findings |
---|---|---|
Trade in Agriculture | ||
Environmental effects of agricultural trade liberalization [25]. | Examined environmental impacts due to agricultural trade liberalization and domestic policy reforms through existing literature. | Indirect impacts were caused due to changes in location, intensity, product mix, and agricultural technology, while direct impacts included pollution due to the transportation of agricultural products, as well as the potential migration of harmful species of plants, animals, and insects that could disrupt the food chain. |
The environmental impacts of agricultural trade: A systematic literature review [26]. | Investigating the relationships between agricultural trade and the environment based on existing literature in international economics. | Focused on local (land use) rather than global emissions (GHGs). A negative relationship between agricultural trade and the environment (pollution) was found, but some studies show a positive relationship, while very few studies could not find any relationship. |
Considering the full array of impacts on human health and the environment by products, services and supply chain [27]: US Environmental Protection Agency Report. | Manufacturing trade-offs in the environment, health, and resource use. | Selection of bioproducts by the producers reduces fossil fuel extraction and inputs as well as GHGs, but the growing and harvesting of bio-feedstocks may also pollute water sources and degrade soil quality. |
The role of exports in manufacturing pollution in sub-Saharan Africa, South Asia: toward better trade-environment governance [28]:UNCTAD Report (2021). | To assess the export-associated pollution by the manufacturing sector in sub-Saharan Africa and South Asia. | Identified the public and private environmental governance opportunities to achieve more sustainable production linked to trade. Should follow sustainable practices despite adding value in the products in the manufacturing sector. |
Trade in Services | ||
Does Service Trade Globalization Promote Trade and Low-Carbon Globalization? Evidence from 30 Countries [29]. | Investigated the effects of service trade globalization on low-carbon globalization through the Unified Efficiency Index and Energy-Environmental Performance Index in 30 countries from 1980 to 2013 using a tobit model. | Service trade openness showed positive effects on both energy and CO2 emission efficiency that have further improved with time, which is good for the environment. Emerging service sectors promoted the improvement of energy and CO2 emission efficiency, while the traditional sectors hindered the efficiency improvement. There existed a “catch-up” effect between less-developed countries and developed countries in terms of energy and CO2 emission efficiency. |
Does trade in services improve carbon efficiency?—Analysis based on international panel data [30]. | Finding the theoretical and empirical impacts of service trade on carbon efficiency using panel data for 55 countries from 2001 to 2015 using a slacks-based measure model with a global Malmquist–Luenberger index. | Carbon efficiency was improved due to service trade, which was greater in exports than imports. Each country showed a different effect for exports and imports of services. |
Variable | Description | Unit of Measurement |
---|---|---|
logCO2 | Log of carbon dioxide emissions | Kilotons |
TTR | Total trade | As a percentage of GDP |
CTR | Commodity trade | As a percentage of GDP |
STR | Service trade | As a percentage of GDP |
GDP | GDP growth | Annual percentage |
FDI | Foreign direct investment | Net inflows as percentage of GDP |
logK | Log of capital | Gross fixed capital formation |
LFP αi | Labor force participation rate Individual country-specific effects | Percentage of total population aged 15+ |
ε | Error term | |
it | Country and time period |
Mean | Standard Deviation | Minimum | Maximum | Count | |
---|---|---|---|---|---|
Log of CO2 | 3.5239 | 1.1509 | 0.5643 | 7.0134 | 7821 |
Total trade | 69.3250 | 37.3352 | 0.0210 | 245.3694 | 6063 |
Commodity trade | 55.7831 | 32.3571 | 2.7226 | 311.5114 | 7056 |
Service trade | 21.3543 | 18.8302 | 0.6250 | 143.9805 | 5121 |
GDP growth | 3.7742 | 6.9498 | −64.0471 | 149.9730 | 6870 |
Foreign direct investment | 3.0166 | 5.8095 | −55.2341 | 161.8238 | 6172 |
Labor force participation rate | 62.0268 | 12.1110 | 31.4400 | 90.3200 | 4185 |
Log of capital | 9.6331 | 0.8879 | 5.7481 | 11.9131 | 4037 |
Model | Chi-Squared Statistic | p-Value |
---|---|---|
Total trade as a percentage of GDP (TTR) | 34.26 | <0.0001 |
Commodity trade as a percentage of GDP (CTR) | 62.722 | <0.0001 |
Service trade as a percentage of GDP (STR) | 63.973 | <0.0001 |
Dependent Variable: | |||
---|---|---|---|
LogCO2 | LogCO2 | LogCO2 | |
Total trade (% of GDP) | 0.003 *** | ||
(0.0002) | |||
Commodity trade (% of GDP) | 0.004 *** | ||
(0.0003) | |||
Service trade (% of GDP) | 0.001 | ||
(0.001) | |||
GDP growth rate | −0.010 *** | −0.011 *** | −0.010 *** |
(0.002) | (0.002) | (0.002) | |
FDI (% of GDP) | −0.012 *** | −0.009 *** | −0.002 |
(0.002) | (0.002) | (0.002) | |
Log capital | 1.024 *** | 1.011 *** | 0.984 *** |
(0.009) | (0.009) | (0.010) | |
Labor force participation rate | −0.008 *** | −0.008 *** | −0.009 *** |
(0.001) | (0.001) | (0.001) | |
Observations | 2580 | 2602 | 2397 |
R2 | 0.857 | 0.856 | 0.844 |
Adjusted R2 | 0.855 | 0.854 | 0.842 |
F-statistic | 3057.205 *** | 3051.155 *** | 2560.033 *** |
(df = 5; 2546) | (df = 5; 2568) | (df = 5; 2363) |
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Saeed, M.Z.; Ghimire, S. Environmental Effects of Commodity Trade vs. Service Trade in Developing Countries. Commodities 2022, 1, 115-126. https://doi.org/10.3390/commodities1020008
Saeed MZ, Ghimire S. Environmental Effects of Commodity Trade vs. Service Trade in Developing Countries. Commodities. 2022; 1(2):115-126. https://doi.org/10.3390/commodities1020008
Chicago/Turabian StyleSaeed, Mohammad Zohaib, and Shankar Ghimire. 2022. "Environmental Effects of Commodity Trade vs. Service Trade in Developing Countries" Commodities 1, no. 2: 115-126. https://doi.org/10.3390/commodities1020008