Abstract
The focus of this exploration was to examine the linkage between trade openness and CO2 effusions in the developing eight (D8) countries. An unbalanced panel dataset spanning the period 1990 to 2016 was employed for the study’s analysis. From the results, the studied panel was heterogeneous and cross-sectionally correlated. Also, all the series gained stationarity after first difference and were materially cointegrated in the long run. The elastic effects of the input variables on the output variable were explored through the DCCEMG estimator, with the support of the AMG and the CCEMG estimators. From the results, trade openness increased CO2 emanations in the D8. Also, economic growth, energy consumption, and financial development promoted CO2 secretions in the nations; however, foreign direct investments mitigated the excretion of CO2 in the countries. On the causal connections amid the series, there was a bidirectional causality between trade openness and CO2 emanations. Also, a one-way causal movement from energy consumption, foreign direct investments, and financial development to CO2 effluents was discovered. Based on the findings, it was recommended among others that effective trade policies that could enhance the transfer of cleaner technologies to the countries should be formulated.
Similar content being viewed by others
Data Availability
The datasets used and/or analyzed during the current study are available from the corresponding author on reasonable request.
Change history
14 March 2024
This article has been retracted. Please see the Retraction Notice for more detail: https://doi.org/10.1007/s11356-024-32895-w
Abbreviations
- TO:
-
Trade openness
- GDP:
-
Economic growth
- EC:
-
Energy consumption
- FDI:
-
Foreign direct investments
- FD:
-
Financial development
- CO2 emissions:
-
Carbon emissions
- D8:
-
Developing eight
- DCCEMG:
-
Dynamic common correlated effects mean group
- AMG:
-
Augmented mean group
- CCEMG:
-
Common correlated effects mean
- CD:
-
Cross-sectional dependence
- XADF:
-
Cross-sectionally augmented Dickey-Fuller
- CIPS:
-
Cross-sectional Im, Pesaran and Shin
- GMM:
-
Generalized method of moment
- TSLS:
-
Two-staged least squares
- NICs:
-
Newly industrialized countries
- EU:
-
European Union
- SSA:
-
Sub-Saharan Africa
- UAE:
-
United Arab Emirates
- VIF:
-
Variance inflation factor
- RMSE:
-
Root mean square error
- CIS:
-
Commonwealth of Independent States
References
Adamu TM, Haq I, Shafiq M (2019) Analyzing the impact of energy, export variety, and FDI on environmental degradation in the context of environmental Kuznets curve hypothesis: a case study of India. Energies 12:1076. https://doi.org/10.3390/en12061076
Afawubo K, Nguedam NC (2016) Are urbanization, industrialization and CO2 emissions cointegrated. In 65th Annual meeting of the French Association
Ahmad M, Khattak SI, Khan A, Rahman ZU (2020) Innovation, foreign direct investment (FDI), and the energy–pollution–growth nexus in OECD region: a simultaneous equation modeling approach. Environ Ecol Stat 27:203–232. https://doi.org/10.1007/s10651-020-00442-8
Akin CS (2014) The impact of foreign trade, energy consumption and income on CO2 emissions. Int J Energy Econ Policy 4:465–475
Al Mamun M, Sohag K, Mia MAH, Uddin GS, Ozturk I (2014) Regional differences in the dynamic linkage between CO2 emissions, sectoral output and economic growth. Renew Sust Energ Rev 38:1–11
Alotaibi AR, Mishra AV (2014) Determinants of international financial integration of GCC markets. Emerg Markets Glob Econ 749–771. https://doi.org/10.1016/b978-0-12-411549-1.00031-4
Ameer A, Munir K (2016) Effect of economic growth, trade openness, urbanization, and technology on environment of selected Asian countries. MPRA Paper 74571, University Library of Munich, Germany
Andrew A, Yusheng K, Twum AK, Ayamba EC, Kongkuah M, Musah M (2021) Trend and relationship between environmental accounting disclosure and environmental performance for mining companies listed in China. Environ Dev Sustain. https://doi.org/10.1007/s10668-020-01164-4
Ansari MA, Khan NA, Ganaie AA (2019) Does foreign direct investment impede environmental quality in Asian countries? A panel data analysis. OPEC Energ Rev 43:109–135
Ansari MA, Haider S, Khan NA (2020) Does trade openness affects global carbon dioxide emissions evidence from the top CO2 emitters. Manage Environ Quality: Int J 31(1):32–53. https://doi.org/10.1108/MEQ-12-2018-0205
Antonakakisa N, Chatziantoniou I, Filis G (2017) Energy consumption, CO2 emissions, and economic growth: an ethical dilemma. Renew Sust Energ Rev 68:808–824. https://doi.org/10.1016/j.rser.2016.09.105
Appiah M, Li F, Korankye B (2021) Modelling the linkages among CO2 emissions, energy consumption and industrialization in Sub-Saharan African (SSA) countries. Environ Sci Pollut Res. https://doi.org/10.1007/s11356-021-12412-z
Asane-Otoo E (2015) Carbon footprint and emission determinants in Africa. Energy 82:426–435
Asumadu-Sarkodie S, Owusu PA (2017) A multivariate analysis of carbon dioxide emissions, electricity consumption, economic growth, financial development, industrialization, and urbanization in Senegal. Energy Sources, Part B: Econ Plan Policy 12(1):77–84
Ayeche MB, Barhoumi M, Hammas MA (2016) Causal linkage between economic growth, financial development, trade openness and CO2 emissions in European countries. Am J Environ Eng 6(4):110–122. https://doi.org/10.5923/j.ajee.20160604.02
Balsalobre-Lorente D, Gokmenoglu KK, Taspinar N, Cantos-Cantos JM (2019) An approach to the pollution haven and pollution halo hypotheses in MINT countries. Environ Sci Pollut Res 26(22):23010–23026. https://doi.org/10.1007/s11356-019-05446-x
Bombardini M, Li B (2016) Trade, pollution and mortality in China (NBER Working Papers No. w22804). National Bureau of Economic Research, Inc.
Boutabba MA (2014) The impact of financial development, income, energy and trade on carbon emissions: Evidence from the Indian economy. Econ Model 40:33–41
Breusch T, Pagan AR (1980) The Lagrange multiplier test and its application to model specifications in econometrics. Rev Econ Stud 47:239–253
Cetin MA, Bakirtas I (2020) The long-run environmental impacts of economic growth, financial development, and energy consumption: evidence from emerging markets. Energy Environ 31:634–655. https://doi.org/10.1177/0958305X19882373
Cetin M, Ecevit E, Yucel AG (2018) The impact of economic growth, energy consumption, trade openness, and financial development on carbon emissions: empirical evidence from Turkey. Environ Sci Pollut Res 25:36589–36603. https://doi.org/10.1007/s11356-018-3526-5
Charfeddine L, Ben Khediri K (2016) Financial development and environmental quality in UAE: cointegration with structural breaks. Renew Sust Energ Rev 55:1322–1335. https://doi.org/10.1016/j.rser.2015.07.059
Chen Y, Wang Z, Zhong Z (2019) CO2 emissions, economic growth, renewable and non-renewable energy production and foreign trade in China. Renew Energy 131:208–216. https://doi.org/10.1016/j.renene.2018.07.047
Chudik A, Pesaran MH (2015) Common correlated effects estimation of heterogeneous dynamic panel data models with weakly exogenous regressors. J Econ 188(2):393–420
Clarke KA (2005) The phantom menace: omitted variable bias in econometric research. Confl Manag Peace Sci 22(4):341–352. https://doi.org/10.1080/07388940500339183
Dedeoğlu M, Koçak E, Uucak ZŞ (2021) The impact of immigration on human capital and carbon dioxide emissions in the USA: an empirical investigation. Air Qual Atmos Health. https://doi.org/10.1007/s11869-020-00973-w
Demena BA, Afesorgbor SK (2020) The effect of FDI on environmental emissions: evidence from a meta-analysis. Energy Policy 138:111192. https://doi.org/10.1016/j.enpol.2019.111192
Dhrifi A, Jaziri R, Alnahdi S (2020) Does foreign direct investment and environmental degradation matter for poverty? Evidence from developing countries. Struct Chang Econ Dyn 52:13–21. https://doi.org/10.1016/j.strueco.2019.09.008
Dogan E, Turkekul B (2016) CO2 emissions, real output, energy consumption, trade, urbanization and financial development: testing the EKC hypothesis for USA. Environ Sci Pollut Res 23(2):1203–1213
Dumitrescu EI, Hurlin C (2012) Testing for Granger non-causality in heterogeneous panels. Econ Model 29:1450–1460
Erdogan S, Yıldırım S, Yıldırım DÇ, Gedikli A (2020) The effects of innovation on sectoral carbon emissions: evidence from G20 countries. J Environ Manag 267:110637. https://doi.org/10.1016/j.jenvman.2020.110637
Eyuboglu K, Uzar U (2020) Examining the roles of renewable energy consumption and agriculture CO2 emission in lucky-seven countries. Environ Sci Pollut Res 27:45031–45040. https://doi.org/10.1007/s11356-020-10374-2
Gokmenoglu KK, Sadeghieh M (2019) Financial development, CO2 emissions, fossil fuel consumption and economic growth: the case of Turkey. Strat Plan Energ Environ 38(4):7–28
Gronewold N (2011) Chicago climate exchange closes nation’s first cap-and-trade system but keeps eye to the future. New York Times: E&E Publishing
Grossman GM Krueger AB (1991) Environmental impacts of a North American free trade agreement (No. w3914). National Bureau of Economic Research
Hasan H, Masoumeh P, Shiva K (2016) Investigating the relationship among economic growth, environmental pollution, financial development, and trade openness in 8 large Muslim countries. J Environ Stud 42(3):649–667
Ho S-Y, Iyke BN (2019) Trade openness and carbon emissions: evidence from Central and Eastern European countries. Rev Econ 70(1):41–67. https://doi.org/10.1515/roe-2018-0001
Huang Y, Chen X, Zhu H, Huang C, Tian Z (2019) The heterogeneous effects of FDI and foreign trade on CO2 emissions: evidence from China. Math Probl Eng 2019:1–14. https://doi.org/10.1155/2019/9612492
Jamel L, Maktouf S (2017) The nexus between economic growth, financial development, trade openness, and CO2 emissions in European countries. Cogent Econ Fin 5:1–25. https://doi.org/10.1080/23322039.2017.1341456
Jebli MB, Youssef SB, Ozturk I (2016) Testing environmental Kuznets curve hypothesis: the role of renewable and nonrenewable energy consumption and trade in OECD countries. Ecol Indic 60:824–831
Karasoy A, Akçay S (2019) Effects of renewable energy consumption and trade on environmental pollution: the Turkish case. Manag Environ Qual: Int J 30:437–455
Li K, Musah M, Kong Y, Mensah IA, Antwi SK, Bawuah J, Donkor M, Coffie CPK, Andrew OA (2020a) Liquidity and firms’ financial performance nexus: panel evidence from non-financial firms listed on the Ghana Stock Exchange. SAGE Open 10(3):215824402095036. https://doi.org/10.1177/2158244020950363
Li K, Hu E, Xu C, Musah M, Yusheng K, Mensah IA, Zu J, Jiang W, Su Y (2020b) A heterogeneous analysis of the nexus between energy consumption, economic growth and carbon emissions: evidence from the group of twenty (G20) countries. Energy Explor Exploit:014459872098019. https://doi.org/10.1177/0144598720980198
Liverman DM (2008) Conventions of climate change: constructions of danger and the dispossession of the atmosphere. J Hist Geogr 35(2):279–296. https://doi.org/10.1016/j.jhg.2008.08.008
Mahmooda H, Alkhateeba TTY, Al-Qahtanic MMZ, Allama Z, Ahmadd N, Furqane M (2020) Energy consumption, economic growth and pollution in Saudi Arabia. Manag Sci Lett 10(5):979–984. https://doi.org/10.5267/j.msl.2019.11.013
Mensah IA, Sun M, Gao C, Omari-Sasu AY, Zhu D, Ampimah BC, Quarcoo A (2019) Analysis on the nexus of economic growth, fossil fuel energy consumption, CO2 emissions and oil price in Africa based on a PMG panel ARDL approach. J Clean Prod 228:161–174. https://doi.org/10.1016/J.JCLEPRO.2019.04.281
Mensah IA, Sun M, Gao C, Omari-Sasu AY, Sun H, Ampimah BC, QuarcooA (2020) Investigation on key contributors of energy consumption in dynamic heterogeneous panel data (DHPD) model for African countries: fresh evidence from dynamic common correlated effect (DCCE) approach. Environ Sci Pollut Res 27:38674–38694. https://doi.org/10.1007/s11356-020-09880-0
Minh NN (2020) Foreign direct investment and carbon dioxide emissions: evidence from capital of Vietnam. Int J Energy Econ Policy 10(3):76–83. https://doi.org/10.32479/ijeep.9023
Mirza FM, Kanwal A (2017) Energy consumption, carbon emissions and economic growth in Pakistan: dynamic causality analysis. Renew Sust Energ Rev 72:1233–1240
Moghadam HE, Dehbashi V (2018) The impact of financial development and trade on environmental quality in Iran. Empir Econ 54(4):1777–1799
Musah M, Kong Y, Mensah IA, Stephen KA, Mary D (2020a) The link between carbon emissions, renewable energy consumption, and economic growth: a heterogeneous panel evidence from West Africa. Environ Sci Pollut Res 27:28867–28889. https://doi.org/10.1007/s11356-020-08488-8
Musah M, Kong Y, Xuan VV (2020b) Predictors of carbon emissions: an empirical evidence from NAFTA countries. Environ Sci Pollut Res 28:11205–11223. https://doi.org/10.1007/s11356-020-11197-x
Musah M, Kong Y, Mensah IA, Antwi SK, Donkor M (2020c) The connection between urbanization and carbon emissions: a panel evidence from West Africa. Environ Dev Sustain. https://doi.org/10.1007/s10668-020-01124-y
Musah M, Kong Y, Mensah IA, Antwi SK, Osei AA, Donkor M (2021) Modelling the connection between energy consumption and carbon emissions in North Africa: evidence from panel models robust to cross-sectional dependence and slope heterogeneity. Environ Dev Sustain. https://doi.org/10.1007/s10668-021-01294-3
Mutascu M (2018) A time-frequency analysis of trade openness and CO2 emissions in France. Energy Policy 115:443–455. https://doi.org/10.1016/j.enpol.2018.01.034
Mutascu M, Sokic A (2020) Trade openness-CO2 emissions nexus: a wavelet evidence from EU. Environ Model Assess 25:411–428. https://doi.org/10.1007/s10666-020-09689-8
Nosheen M, Iqbal J, Hassan SA (2019) Economic growth, financial development, and trade in nexuses of CO2 emissions for Southeast Asia. Environ Sci Pollut Res 26(36):36274–36286
Ozturk I, Acaravci A (2013) The long-run and causal analysis of energy, growth, openness and financial development on carbon emissions in Turkey. Energy Econ 36:262–267
Ozturk I, Al-Mulali U (2015) Investigating the validity of the environmental Kuznets curve hypothesis in Cambodia. Ecol Indic 57:324–330
Pesaran MH (2004) General diagnostic tests for cross section dependence in panels. Cambridge Work Pap in Econ 0435 3:1–39
Pesaran H, Smith R (1995) Estimating long-run relationships from dynamic heterogeneous panels. J Econ 68(1):79–113. https://doi.org/10.1016/0304-4076(94)01644-F
Pesaran MH, Yamaga T (2008) Testing slope homogeneity in large panels. J Econ 142:50–93
Phale K, Li F, Adjei Mensah I, Omari-Sasu AY, Musah M (2021) Knowledge-based economy capacity building for developing countries: a panel analysis in southern African development community. Sustainability 13:2890. https://doi.org/10.3390/su13052890
Rahman ZU, Cai H, Khattak SI, Hasan MM (2019) Energy production-income-carbon emissions nexus in the perspective of N.A.F.T.A. and B.R.I.C. nations: a dynamic panel data approach. Econ Res-Ekonomska Istraživanja 32:3378–3391. https://doi.org/10.1080/1331677X.2019.1660201
Salahuddin M, Alam K, Ozturk I, Sohag K (2018) The effects of electricity consumption, economic growth, financial development and foreign direct investment on CO2 emissions in Kuwait. Renew Sust Energ Rev 81:2002–2010
Salehnia N, Alavijeh NK, Salehnia N (2020) Testing Porter and pollution haven hypothesis via economic variables and CO2 emissions: a cross-country review with panel quantile regression method. Environ Sci Pollut Res 27:31527–31542. https://doi.org/10.1007/s11356-020-09302-1
Sarkodie SA, Strezov V (2019) Effect of foreign direct investments, economic development and energy consumption on greenhouse gas emissions in developing countries. Sci Total Environ 646:862–871. https://doi.org/10.1016/j.scitotenv.2018.07.365
Saud S, Chen S, Haseeb A, Khan K, Imran M (2019) The nexus between financial development, income level, and environment in Central and Eastern European countries: A perspective on Belt and Road Initiative. Environ Sci Pollut Res 26:16053–16075. https://doi.org/10.1007/s11356-019-05004-5
Seetanah B, Fauzel S (2019) Investigating the impact of climate change on the tourism sector: evidence from a sample of island economies. Tourism Rev 74(2), 194-203.
Shahbaz M, Hye QMA, Tiwari AK, Leitão NC (2013) Economic growth, energy consumption, financial development, international trade and CO2 emissions in Indonesia. Renew Sust Energ Rev 25:109–121
Shahbaz M, Nasreen S, Ahmed K, Hammoudeh S (2016) Trade openness–carbon emissions nexus: the importance of turning points of trade openness for country panels. Energy Econ 61:221–232. https://doi.org/10.1016/j.eneco.2016.11.008
Shahbaz M, Raghutla C, Song M, Zameer H, Jiao Z (2020) Public-private partnerships investment in energy as new determinant of CO2 emissions: the role of technological innovations in China. Energy Econ 86(104664):104664. https://doi.org/10.1016/j.eneco.2020.104664
Shahzad SJH, Kumar RR, Zakaria M, Hurr M (2017) Carbon emission, energy consumption, trade openness and financial development in Pakistan: a revisit. Renew Sust Energ Rev 70:185–192
Sharma SS (2011) Determinants of carbon dioxide emissions: empirical evidence from 69 countries. Appl Energy 88:376–382
Shoaib HM, Rafique MZ, Nadeem AM, Huang S (2020) Impact of financial development on CO2 emissions: a comparative analysis of developing countries (D8) and developed countries (G8). Environ Sci Pollut Res 27(11):12461–12475. https://doi.org/10.1007/s11356-019-06680-z
Solarin AA, Al-Mulali U (2018) Influence of foreign direct investment on indicators of environmental degradation. Environ Sci Pollut Res 25:24845–24859. https://doi.org/10.1007/s11356-018-2562-5
Ssali MW, Du J, Mensah IA, Hongo DO (2019) Investigating the nexus among environmental pollution, economic growth, energy use, and foreign direct investment in 6 selected sub-Saharan African countries. Environ Sci Pollut Res 26(11):11245–11260
Sun J, Shi J, Shen B, Li S, Wang Y (2018) Nexus among energy consumption, economic growth, urbanization and carbon emissions: heterogeneous panel evidence considering China’s regional differences. Sustainability 10:2383. https://doi.org/10.3390/su10072383
Sun H, Clottey SA, Geng Y, Fang K, Amissah JCK (2019) Trade openness and carbon emissions: evidence from Belt and Road countries. Sustainability 11:2682. https://doi.org/10.3390/su11092682
Sun H, Enna L, Monney A, Tran DK, Rasoulinezhad E, Taghizadeh-Hesary F (2020) The long-run effects of trade openness on carbon emissions in sub-Saharan African countries. Energies 13:5295. https://doi.org/10.3390/en13205295
Sun D, Addae EA, Jemmali H, Mensah IA, Musah M, Claudia NM, Appiah-Twum F (2021) Examining the determinants of water resources availability in sub-Sahara Africa: a panel-based econometrics analysis. Environ Sci Pollut Res. https://doi.org/10.1007/s11356-020-12256-z
To AH, Ha DT-T, Nguyen HM, Vo DH (2019) The impact of foreign direct investment on environment degradation: evidence from emerging markets in Asia. Int J Environ Res Public Health 16:1636. https://doi.org/10.3390/ijerph16091636
Udemba EN, Agha CO (2020) Abatement of pollutant emissions in Nigeria: a task before multinational corporations. Environ Sci Pollut Res 27:26714–26724. https://doi.org/10.1007/s11356-020-08908-9
Ullah I, Ali S, Shah MH, Yasim F, Rehman A, Al-Ghazali BM (2019) Linkages between trade, CO2 emissions and healthcare spending in China. Int J Environ Res Public Health 16:4298. https://doi.org/10.3390/ijerph16214298
Wang Y, Zhao T (2015) Impacts of energy-related CO2 emissions: evidence from under developed, developing and highly developed regions in China. Ecol Indic 50:186–195
Westerlund J, Edgerton DL (2007) A panel bootstrap cointegration test. Econ Lett 97:185–190
World Development Indicators (2020). https://databank.worldbank.org/source/world-development-indicators
Yang B, Ali M, Hashmi SH, Shabir M (2020) Income inequality and CO2 emissions in developing countries: the moderating role of financial instability. Sustainability 12(17):6810. https://doi.org/10.3390/su12176810
Yu C, Nataliia D, Yoo S-J, Hwang Y-S (2019) Does trade openness convey a positive impact for the environmental quality? Evidence from a panel of CIS countries. Eurasian Geogr Econ 60(3):333–356. https://doi.org/10.1080/15387216.2019.1670087
Yuxiang K, Chen Z (2011) Resource abundance and financial development: Evidence from China. Resour Pol 36(1):72–79. https://doi.org/10.1016/j.resourpol.2010.05.002
Zafar MW, Mirza FM, Zaidi SAH, Hou F (2019) The nexus of renewable and nonrenewable energy consumption, trade openness, and CO2 emissions in the framework of EKC: evidence from emerging economies. Environ Sci Pollut Res. https://doi.org/10.1007/sl1356-019-Q4912-w
Zaidi SAH, Danish, Hou F, Mirza FM (2019) The role of renewable and non-renewable energy consumption in CO2 emissions: a disaggregate analysis of Pakistan. Environmental Science and Pollution Research 25 (31):31616-31629
Zhang S (2018) Is trade openness good for environment in South Korea? The role of non-fossil electricity consumption. Environ Sci Pollut Res 25:9510–9522
Zhang S, Liu X, Bae J (2017) Does trade openness affect CO2 emissions: evidence from ten newly industrialized countries? Environ Sci Pollut Res 24(21):17616–17625
Funding
This study was funded by the Nature Fund 2020 (Project Approval Number: 71973054).
Author information
Authors and Affiliations
Contributions
MM conceptualized and wrote the final manuscript. YK supervised the study. IAM analyzed the data and aided in discussions. KL aided in analysis and discussions. XVV helped in analysis and discussions. JB contributed data and helped in analysis and discussions. JKA aided in drafting the original manuscript. SKA helped in analysis and discussions. MD contributed data and helped in analysis and discussions. All authors read and approved the final manuscript.
Corresponding author
Ethics declarations
Ethics approval and consent to participate
Not applicable.
Consent for publication
Not applicable.
Competing interest
The authors declare no competing interests.
Additional information
Responsible Editor: Nicholas Apergis
Publisher’s note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
This article has been retracted. Please see the retraction notice for more detail: https://doi.org/10.1007/s11356-024-32895-w"
Rights and permissions
Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
About this article
Cite this article
Musah, M., Kong, Y., Mensah, I.A. et al. RETRACTED ARTICLE: Trade openness and CO2 emanations: a heterogeneous analysis on the developing eight (D8) countries. Environ Sci Pollut Res 28, 44200–44215 (2021). https://doi.org/10.1007/s11356-021-13816-7
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11356-021-13816-7