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Impacts of export quality on environmental degradation: does income matter?

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Abstract

International trade in connection with carbon dioxide (CO2) emissions has been well studied, but export quality in this context has not widely been considered yet. Hence, in this study, we fill this gap by exploring the effects of export quality, economic growth, urbanization, trade openness, and total energy use on CO2 emissions in 63 developed and developing countries around the world. To achieve our objectives, we have used the recent techniques of panel quantile estimators as proposed in Powell (2016) and Canay. Econ J 14 (3): 368-386, (2011), along with several other estimation methods. Our overall empirical evidence shows that the existence of the Environmental Kuznets Curve (EKC) hypothesis depends heavily on the estimation method and on the development stage of the economies considered. Emissions are influenced by the same factors as in the EKC specification, as explored in sensitivity analysis. The results from the panel quantile regression model show that economic growth and total energy use are highly CO2 emissions conducive, while urbanization increases environmental degradation at the higher quantiles, as does export quality, depending on the countries’ income levels. Consequently, improvements in export product quality should be prioritized through the production of cleaner products mainly in the lower and upper middle-income countries. There should also be a decrease in total energy use in countries of all income levels. Particularly, policy makers should promote a decrease in export products intensive of fossil fuel energy by prioritizing the use of more renewable energy sources.

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Notes

  1. 1.

    The only exception is Gozgor and Can (2017); however, it explores the same question but is related to China only.

  2. 2.

    Even though rich countries tend to produce higher quality goods, the concepts of “quality” and “sophisticated” are quite different. Quality refers to the relative prices of a country’s product varieties in the respective product groups. The sophistication of a product, as Hausmann et al. (2007) indicated, is determined by the composition of the total export basket.

  3. 3.

    We thank the reviewer who asked us to include these new estimates into our results, which will be used for robustness check.

  4. 4.

    This is known in the literature as the Powell (2015) method, although it has been developed by Graham et al. and published in 2018.

  5. 5.

    Tables 10, 14, and 18 present the equivalent results but for the high-income, lower middle-income, and upper midddle-income countries, respectively.

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Acknowledgments

Mara Madaleno would like to acknowledge the support she received (in part) from the Research Unit on Governance, Competitiveness and Public Policy-GOVCOPP. Any persistent errors are sole responsibility of the authors. We also are thankful for the useful comments of the reviewers and the editor, which helped us to clearly improve this work.

Funding

This work was financially supported by the research unit on Governance, Competitiveness and Public Policy (UID/CPO/04058/2019), funded by national funds through FCT-Fundação para a Ciência e a Tecnologia.

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Correspondence to Mara Madaleno.

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Appendix 1

Appendix 1

Grouping the countries according to the level of development is based on the United Nations (UN) World Economic Situation and Prospects (2018) report. The list of the countries is presented in Appendix 1.

World Economic Situation and Prospects (2018). https://www.un.org/development/desa/dpad/wpcontent/uploads/sites/45/publication/WESP2018_Full_Web-1.pdf. (Access:07.03.2019).

Lower middle-income countries (less and $4035)Upper middle-income countries ($4036 and $12,475)High-income countries ($12,476 or more)
BeninArgentinaAustralia
BoliviaBrazilAustria
Cote d’lvoireChinaCanada
CameroonColombiaChile
Congo dem.Costa RicaDenmark
AlgeriaCubaSpain
Egypt rep.Dominician rep.Finland
GabonEcvadorFrance
GhanaJamaicaUnited Kingdom
GuatemalaMexicoGreece
HondurasMalaysiaIceland
IndonesiaPanamaIsrael
IndiaThailandItaly
IraqTunisiaJapan
KenyaTurkeySouth Korea
Morocco Netherlands
Nigeria Norway
Nicaragua Oman
Pakistan Portugal
Sudan Singapore
Senegal Sweden
El Salvador Trinidad and Tabago
Togo Uruguay
  United States
  Ireland

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Dogan, B., Madaleno, M., Tiwari, A.K. et al. Impacts of export quality on environmental degradation: does income matter?. Environ Sci Pollut Res (2020). https://doi.org/10.1007/s11356-019-07371-5

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Keywords

  • Export Quality Index
  • Total energy use
  • Trade openness
  • Environmental Kuznets curve
  • Panel quantile regressions
  • Income levels

JEL classification

  • Q53
  • Q56
  • O13
  • O18
  • F18
  • C33