Skip to main content

Does export product quality matter for CO2 emissions? Evidence from China

Environmental Science and Pollution Research volume 24, pages 2866–2875 (2017)Cite this article

Abstract

This paper re-estimates the environmental Kuznets curve (EKC) in China. To this end, it uses the unit root tests with structural breaks and the autoregressive-distributed lag (ARDL) estimations over the period 1971–2010. The special role is given to the impact of export product quality on CO2 emissions in the empirical models. The paper finds that the EKC hypothesis is applicable in China. It also observes the positive effect from energy consumption to CO2 emissions. In addition, it finds that the export product quality is negatively associated with CO2 emissions. The paper also argues potential implications.

This is a preview of subscription content, access via your institution.

Access options

Buy single article

Instant access to the full article PDF.

43,34 €

Price includes VAT (Finland)
Tax calculation will be finalised during checkout.

Fig. 1

Notes

  1. Papers on the determinants of export quality observed that FDI is an important determinant of the export quality (e.g., Harding and Javorcik 2012; Henn et al. 2015). The studies for testing the validity of the EKC hypothesis also underline that FDI is an important determinant of CO2 emissions (e.g., List and Co 2000; Tang and Tan 2015; Zhang and Zhou 2016). Therefore, export quality can be used as a control variable in the EKC hypothesis not only for trade openness, but also for FDI as the benchmark indicator of globalization.

  2. These new variables for globalization aspects can be listed as the economic complexity, export diversification, and export quality upgrading (see, e.g., Agosin et al. 2012; Gozgor and Can 2016b; Hausmann et al. 2007 and 2011; Henn et al. 2013 and 2015).

  3. It is observed that new variables for globalization are used in the studies investigating the relationship between international trade and CO2 emissions. For example, Gozgor and Can (2016a) analyzed the impacts of export diversification on CO2 emissions in Turkey, while Can and Gozgor (2016) investigated the effects of economic complexity on CO2 emissions in France within the context of the EKC hypothesis.

  4. Export product quality is mainly measured by the unit price in the literature (e.g., Feenstra and Romalis 2014; Hallak 2006; Hallak and Schott 2011; Hummels and Klenow 2005; Khandelwal 2010; Martin and Mejean 2014; Schott 2004). However, according to Henn et al. (2013 and 2015), the unit price does not completely reflect the export product quality and they propose the new index for measuring export product quality.

  5. Financial development, foreign direct investment (FDI), international trade, population, and urbanization are considered as controls for testing the validity of the EKC hypothesis. (e.g., Al-Mulali and Ozturk 2015; Bento and Moutinho 2016; Dogan and Turkekul 2016; Jebli et al. 2016; Lau et al. 2014; Liddle 2015; Tang and Tan 2015).

  6. There are also studies that focus on the relationship between the sub-elements of CO2 emissions and per capita income in China (e.g., Aslan and Gozbasi 2016).

References

  • Agosin MR, Alvarez R, Bravo-Ortega C (2012) Determinants of export diversification around the world: 1962–2000. World Economy 35(3):295–315

    Article  Google Scholar 

  • Al-Mulali U, Ozturk I (2015) The effect of energy consumption, urbanization, trade openness, industrial output, and the political stability on the environmental degradation in the MENA (Middle East and North African) region. Energy 84:382–389

    Article  Google Scholar 

  • Arouri MH, Ben Youssef AB, M’henni H, Rault C (2012) Energy consumption, economic growth and CO2 emissions in Middle East and North African countries. Energy Policy 45:342–349

    Article  Google Scholar 

  • Aslan A, Gozbasi O (2016) Environmental Kuznets curve hypothesis for sub-elements of the carbon emissions in China. Nat Hazards 82(2):1327–1340

    Article  Google Scholar 

  • Bento JPC, Moutinho V (2016) CO2 emissions, non-renewable and renewable electricity production, economic growth and international trade in Italy. Renew Sust Energ Rev 55:142–155

    Article  Google Scholar 

  • Can M, Gozgor G (2016) Dynamic relationships among CO2 emissions, energy consumption, economic growth, and economic complexity in France. Munich Personal RePEc Archive, No. 70373

  • Chang C-C (2010) A multivariate causality test of carbon dioxide emissions, energy consumption and economic growth in China. Appl Energy 87(11):3533–3537

    CAS  Article  Google Scholar 

  • Diao XD, Zeng SX, Tam CM, Tam VWY (2009) EKC analysis for studying economic growth and environmental quality: a case study in China. J Clean Prod 17(5):541–548

    Article  Google Scholar 

  • Dogan E, Turkekul B (2016) CO2 emissions, real output, energy consumption, trade, urbanization and financial development: testing the EKC hypothesis for the USA. Environ Sci Pollut Res 23(2):1203–1213

    Article  Google Scholar 

  • Du L, Wei C, Cai S (2012) Economic development and carbon dioxide emissions in China: provincial panel data analysis. China Econ Rev 23(2):371–384

    Article  Google Scholar 

  • Ertugrul HM, Cetin M, Seker F, Dogan E (2016) The impact of trade openness on global carbon dioxide emissions: evidence from the top ten emitters among developing countries. Ecol Indic 67:543–555

    Article  Google Scholar 

  • Feenstra RC, Romalis J (2014) International prices and endogenous quality. Q J Econ 129(2):477–527

    Article  Google Scholar 

  • Fei L, Dong S, Xue L, Liang Q, Yang W (2011) Energy consumption-economic growth relationship and carbon dioxide emissions in China. Energy Policy 39(2):568–574

    Article  Google Scholar 

  • Govindaraju VGRC, Tang CF (2013) The dynamic links between CO2 emissions, economic growth and coal consumption in China and India. Appl Energy 104:310–318

    Article  Google Scholar 

  • Gozgor G (2014) Aggregated and disaggregated import demand in China: an empirical study. Econ Model 43:1–8

    Article  Google Scholar 

  • Gozgor G, Can M (2016a) Export product diversification and the Environmental Kuznets Curve: evidence from Turkey. Environ Sci Pollut Res 23(21):21594–21603

  • Gozgor G, Can M (2016b) Effects of the product diversification of exports on income at different stages of economic development. Eurasian Bus Rev 6(2):215–235

    Article  Google Scholar 

  • Grossman G, Krueger A (1995) Economic growth and the environment. Q J Econ 110(2):353–377

    Article  Google Scholar 

  • Hallak JC (2006) Product quality and the direction of trade. J Int Econ 68(1):238–265

    Article  Google Scholar 

  • Hallak JC, Schott PK (2011) Estimating cross-country differences in product quality. Q J Econ 126(1):417–474

    Article  Google Scholar 

  • Harding T, Javorcik BS (2012) Foreign direct investment and export upgrading. Rev Econ Stat 94(4):964–980

    Article  Google Scholar 

  • Hausmann R, Hwang J, Rodrik D (2007) What you export matters. J Econ Growth 12(1):1–25

    Article  Google Scholar 

  • Hausmann R, Hidalgo CA, Bustos S, Coscia M, Chung S, Jimenez J, Simoes A, Yildirim M (2011) The atlas of economic complexity. Puritan Press, Cambridge, MA

    Google Scholar 

  • He J, Wang H (2012) Economic structure, development policy and environmental quality: an empirical analysis of environmental Kuznets curves with Chinese municipal data. Ecol Econ 76:49–59

    Article  Google Scholar 

  • Henn C, Papageorgiou C, Spatafora N (2013) Export Quality in Developing Countries. IMF Working Paper Series, No. WP/13/108. Washington, D.C., International Monetary Fund

  • Henn C, Papageorgiou C, Spatafora N (2015) Export quality in advanced and developing economies: evidence from a new dataset. WTO Working Paper, No. ERSD-2015–02. Geneva: World Trade Organization

  • Hummels D, Klenow PJ (2005) The variety and quality of a Nation’s exports. Am Econ Rev 95(3):704–723

    Article  Google Scholar 

  • International Monetary Fund (2014) Sustaining long–run growth and macroeconomic stability in low–income countries–the role of structural transformation and diversification. IMF Policy Paper, March 2014. Washington, D.C.: International Monetary Fund

  • Jalil A, Feridun M (2011) The impact of growth, energy and financial development on the environment in China: a cointegration analysis. Energy Econ 33(2):284–291

    Article  Google Scholar 

  • Jalil A, Mahmud SF (2009) Environment Kuznets curve for CO2 emissions: a cointegration analysis for China. Energy Policy 37(12):5167–5172

    Article  Google Scholar 

  • Jaunky VC (2011) The CO2 emissions-income nexus: evidence from rich countries. Energy Policy 39:1228–1240

    CAS  Article  Google Scholar 

  • Javid M, Sharif F (2016) Environmental Kuznets curve and financial development in Pakistan. Renew Sust Energ Rev 54:406–414

    Article  Google Scholar 

  • Jayanthakumaran K, Liu Y (2012) Openness and the environmental Kuznets curve: evidence from China. Econ Model 29(3):566–576

    Article  Google Scholar 

  • Jayanthakumaran K, Verma R, Liu Y (2012) CO2 emissions, energy consumption, trade and income: a comparative analysis of China and India. Energy Policy 42:450–460

    Article  Google Scholar 

  • Jebli MB, Youssef SB, Ozturk I (2016) Testing environmental Kuznets curve hypothesis: the role of renewable and non-renewable energy consumption and trade in OECD countries. Ecol Indic 60:824–831

    Article  Google Scholar 

  • Kang Y-Q, Zhao T, Yang Y-Y (2016) Environmental Kuznets curve for CO2 emissions in China: a spatial panel data approach. Ecol Indic 63:231–239

    CAS  Article  Google Scholar 

  • Khandelwal A (2010) The long and short (of) quality ladders. Rev Econ Stud 77(4):1450–1476

    Article  Google Scholar 

  • Lau L-S, Choong C-K, Eng Y-K (2014) Investigation of the environmental Kuznets curve for carbon emissions in Malaysia: do foreign direct investment and trade matter? Energy Policy 68:490–497

    Article  Google Scholar 

  • Lee J, Strazicich C (2003) Minimum Lagrange multiplier unit root test with two structural breaks. Rev Econ Stat 85(4):1082–1089

    Article  Google Scholar 

  • Li T, Wang Y, Zhao D (2016) Environmental Kuznets curve in China: new evidence from dynamic panel analysis. Energy Policy 91:138–147

    Article  Google Scholar 

  • Liddle B (2015) What are the carbon emissions elasticities for income and population? Bridging STIRPAT and EKC via robust heterogeneous panel estimates. Glob Environ Chang 31:62–73

    Article  Google Scholar 

  • List JA, Co CY (2000) The effects of environmental regulations on foreign direct investment. J Environ Econ Manag 40(1):1–20

    Article  Google Scholar 

  • Liu Y, Zhou Y, Wu W (2015) Assessing the impact of population, income and technology on energy consumption and industrial pollutant emissions in China. Appl Energy 155:904–917

    CAS  Article  Google Scholar 

  • Managi S, Jena PR (2008) Environmental productivity and Kuznets curve in India. Ecol Econ 65(2):432–440

    Article  Google Scholar 

  • Martin J, Mejean I (2014) Low-wage country competition, and the quality content of high-wage country exports. J Int Econ 93(1):140–152

    Article  Google Scholar 

  • Narayan PK (2005) The saving and investment nexus for China: evidence from cointegration tests. Appl Econ 37(17):1979–1990

    Article  Google Scholar 

  • Narayan PK, Narayan S (2010) Carbon dioxide and economic growth: panel data evidence from developing countries. Energy Policy 38:661–666

    Article  Google Scholar 

  • Narayan PK, Smyth R (2006) What determines migration flows from low-income to high-income countries? An empirical investigation of Fiji-U.S. migration 1972–2001. Contemp Econ Policy 24(2):332–342

    Article  Google Scholar 

  • Narayan PK, Saboori B, Soleymani A (2016) Economic growth and carbon emissions. Econ Model 53:388–397

    Article  Google Scholar 

  • Ouyang X, Lin B (2015) An analysis of the driving forces of energy-related carbon dioxide emissions in China’s industrial sector. Renew Sust Energ Rev 45:838–849

    CAS  Article  Google Scholar 

  • Pesaran MH, Shin Y (1999) An autoregressive distributed lag modelling approach to cointegration analysis. In: Strom S (ed) Econometrics and economic theory in the twentieth century. The Ragnar Frisch Centennial Symposium, Cambridge, pp. 371–413

    Chapter  Google Scholar 

  • Pesaran MH, Shin Y, Smith RJ (2001) Bounds testing approaches to the analysis of level relationships. J Appl Econ 16(3):289–326

    Article  Google Scholar 

  • Ren S, Yuan B, Ma X, Chen X (2014) International trade, FDI (foreign direct investment) and embodied CO2 emissions: a case study of Chinas industrial sectors. China Econ Rev 28:123–134

    Article  Google Scholar 

  • Rodrik D (2006) What’s so special about China’s export? China World Econ 14(5):1–19

    Article  Google Scholar 

  • Saboori B, Sulaiman J (2013) CO2 emissions, energy consumption and economic growth in Association of Southeast Asian Nations (ASEAN) countries: a cointegration approach. Energy 55:813–822

    Article  Google Scholar 

  • Schott P (2004) Across-product versus within-product specialization in international trade. Q J Econ 119(2):647–678

    Article  Google Scholar 

  • Shen J (2006) A simultaneous estimation of environmental Kuznets curve: evidence from China. China Econ Rev 17(4):383–394

    Article  Google Scholar 

  • Song T, Zheng T, Tong L (2008) An empirical test of the environmental Kuznets curve in China: a panel cointegration approach. China Econ Rev 19(3):381–392

    Article  Google Scholar 

  • Steenhof PA (2007) Decomposition for emission baseline setting in China’s electricity sector. Energy Policy 35(1):280–294

    Article  Google Scholar 

  • Tang CF, Tan BW (2015) The impact of energy consumption, income and foreign direct investment on carbon dioxide emissions in Vietnam. Energy 79:447–454

    Article  Google Scholar 

  • Tian YH, Zhu QH, Geng Y (2013) An analysis of energy-related greenhouse gas emissions in the Chinese iron and steel industry. Energy Policy 56:352–361

    Article  Google Scholar 

  • Wang Z, Liu W (2015) Determinants of CO2 emissions from household daily travel in Beijing, China: individual travel characteristic perspectives. Appl Energy 158:292–299

    CAS  Article  Google Scholar 

  • Wang Z, Wei S-J (2010) What accounts for the rising sophistication of China’s exports? R.C. Feenstra and S-J Wei (Eds.). In: China’s growing role in world trade. University of Chicago Press, Chicago, IL, pp. 63–104

    Google Scholar 

  • Wang SS, Zhou DQ, Zhou P, Wang QW (2011) CO2 emissions, energy consumption and economic growth in China: a panel data analysis. Energy Policy 39(9):4870–4875

    Article  Google Scholar 

  • Wang QW, Zhou P, Shen N, Wang SS (2013) Measuring carbon dioxide emission performance in Chinese provinces: a parametric approach. Renew Sust Energ Rev 21:324–330

    Article  Google Scholar 

  • Wang SJ, Fang CL, Ma HT, Wang Y, Qin J (2014) Spatial differences and multi-mechanism of carbon footprint based on GWR model in provincial China. J Geogr Sci 24(4):612–630

    Article  Google Scholar 

  • Wang S, Zhou C, Li G, Feng K (2016a) CO2, economic growth, and energy consumption in China’s provinces: investigating the spatiotemporal and econometric characteristics of China’s CO2 emissions. Ecol Indic 69:184–195

    Article  Google Scholar 

  • Wang Y, Han R, Kubota J (2016b) Is there an environmental Kuznets curve for SO2 emissions? A semi-parametric panel data analysis for China. Renew Sust Energ Rev 54:1182–1188

    CAS  Article  Google Scholar 

  • Xu J-H, Fleiter T, Eichhammer W, Fan Y (2012) Energy consumption and CO2 emissions in China’s cement industry: a perspective from LMDI decomposition analysis. Energy Policy 50:821–832

    CAS  Article  Google Scholar 

  • Zhang Y-J (2011) The impact of financial development on carbon emissions: an empirical analysis in China. Energy Policy 39(4):2197–2203

    Article  Google Scholar 

  • Zhang C, Lin Y (2012) Panel estimation for urbanization, energy consumption and CO2 emissions: a regional analysis in China. Energy Policy 49:488–498

    Article  Google Scholar 

  • Zhang C, Zhou X (2016) Does foreign direct investment lead to lower CO2 emissions? Evidence from a regional analysis in China. Renew Sust Energ Rev 58:943–951

    Article  Google Scholar 

  • Zhou Y, Liu Y, Wu W, Li Y (2015) Effects of rural-urban development transformation on energy consumption and CO2 emissions: a regional analysis in China. Renew Sust Energ Rev 52:863–875

    CAS  Article  Google Scholar 

  • Zivot E, Andrews DWK (1992) Further evidence on the great crash, the oil price shock and the unit root hypothesis. J Bus Econ Stat 10(3):251–270

    Google Scholar 

Download references

Acknowledgments

We would like to express our gratitude to three anonymous reviewers for their very valuable comments and suggestions, which substantially improved the paper.

Author information

Affiliations

  1. Istanbul Medeniyet University, Istanbul, Turkey

    Giray Gozgor

  2. Hakkari University, Hakkari, Turkey

    Muhlis Can

Authors
  1. Giray Gozgor
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Muhlis Can
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Giray Gozgor.

Additional information

Responsible editor: Philippe Garrigues

Appendix

Appendix

Table 7 Statistical details of variables in the empirical model (1971–2010)
Full size table

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Gozgor, G., Can, M. Does export product quality matter for CO2 emissions? Evidence from China. Environ Sci Pollut Res 24, 2866–2875 (2017). https://doi.org/10.1007/s11356-016-8070-6

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11356-016-8070-6

Keywords

  • EKC hypothesis
  • Export quality
  • ARDL estimations
  • Structural breaks
  • Chinese economy

JEL classification

  • Q56
  • O13
  • L15
  • C32