Skip to main content

Advertisement

SpringerLink
Log in

Trade openness and environment: a panel data analysis for 88 selected BRI countries

  • Research Article
  • Published:
Environmental Science and Pollution Research Aims and scope Submit manuscript

Abstract

In 2013, the Chinese government officially announced the Belt and Road Initiative (BRI). Since then, environmentalists have raised concerns regarding the environmental impact of trade between China and BRI countries. Therefore, the current study aims to analyze the environmental impact of the two aspects of BRI countries’ trade: First, it examines the environmental impact of trade openness between China and BRI countries. Second, it examines the environmental impact of trade openness among BRI countries. For this purpose, the current study employs the two-step system GMM model with a panel dataset for the period 2001–2018. The results obtained for the whole sample of 88 selected BRI countries suggest that the trade openness between China and BRI countries significantly reduces CO2 emissions. However, the trade openness among BRI countries has no significant effect on CO2 emissions. In addition, BRI countries’ exports to China do not have a significant effect on CO2 emissions. However, BRI countries’ imports from China significantly reduce CO2 emissions in these countries. The results obtained for the subsamples of BRI countries suggest that the trade openness between China and BRI countries, BRI countries’ exports to China, and BRI countries’ imports from China have no significant effect on CO2 emissions in both low-income and high-income BRI countries. Moreover, the trade openness among BRI countries significantly increases CO2 emissions in low-income BRI countries only.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4

Similar content being viewed by others

Notes

  1. We have considered the two aspects of BRI countries’ trade. One aspect is the trade between China and BRI countries. The other aspect is the trade among BRI countries (each BRI country’s trade with rest of the BRI countries).

  2. Low-income BRI countries include both lower-income countries and lower-middle-income countries.

  3. High-income BRI countries include both upper-middle-income countries and high-income countries.

  4. The most commonly used measures of environmental pollution are CO2 (carbon dioxide) emissions and NO2 (nitrogen dioxide) emissions. They both emit from direct fuel combustion and other burning activities. Both are considered severe threats to the environmental quality. According to the environmental protection agency report 2017, CO2 accounts 76% share of global greenhouse gas emissions. Therefore, it is most commonly used as a measure of environmental pollution.

  5. The validity of instruments requires that these instruments should be correlated with their respective level terms but not correlated with the error term. The validity of instruments are tested with Hansen test of over identifying restrictions with null hypothesis suggesting that the instruments used are valid.

  6. The justification of the GMM technique requires the existence of the first-order serial correlation (but no second- order serial correlation) in the differenced equation.

References

  • Ajayi, P., & Ogunrinola, A. (2020). Growth, trade openness and environmental degradation in Nigeria.

    Google Scholar 

  • Ali Z, Zaman Z, Ali M (2015) The Effect of International Trade on Carbon Emissions: Evidence from Pakistan. Journal of Economics and Sustainable Development 6(9):289–299

    Google Scholar 

  • Anderson K (1996) Economic development, trade, and the environment; Australian Agricultural and Resource Economics Society . Conference (40th), Melbourne, Australia (No. 407-2016-25365)

  • Antweiler W, Copeland BR, Taylor MS (2001) Is free trade good for the environment? AER 91(4):877–908

    Article  Google Scholar 

  • Azhar U, Khalil S, Ahmed MH (2007) Environmental effects of trade liberalisation: a case study of Pakistan. Pak Dev Rev:645–655

  • Belloumi M, Alshehry A (2020) The impact of international trade on sustainable development in Saudi Arabia. Sustainability 12(13):5421

    Article  Google Scholar 

  • Bernard J, Mandal SK (2016) The impact of trade openness on environmental quality: an empirical analysis of emerging and developing economies. WIT Trans Ecol Environ 203:195–208

    Article  CAS  Google Scholar 

  • Blundell R, Bond S (1998) Initial conditions and moment restrictions in dynamic panel data models. J Econ 87(1):115–143

    Article  Google Scholar 

  • Boulatoff C, Jenkins M (2010) Long-term nexus between openness, income, and environmental quality. IAER 16(4):410–418

    Google Scholar 

  • Brack D (1995) Balancing trade and the environment. Aff 71(3):497–514

    Google Scholar 

  • Cai X, Che X, Zhu B, Zhao J, Xie R (2018) Will developing countries become pollution havens for developed countries? An empirical investigation in the Belt and Road. J Clean Prod 198:624–632

    Article  Google Scholar 

  • Chang SC (2015) The effects of trade liberalization on environmental degradation. Qual Quant 49(1):235–253

    Article  Google Scholar 

  • Chen H, Hu W, (2020) Determining Whether trade can effect regional environmental sustainability from the perspective of environmental pollution. Sustainability, 12(5), p.1746.

  • Chen F, Jiang G, Kitila GM (2021) Trade openness and CO2 Emissions: The heterogeneous and mediating effects for the Belt and Road Countries. Sustainability 13(4):1958

    Article  Google Scholar 

  • Cherniwchan J (2017) Trade liberalization and the environment: Evidence from NAFTA and US manufacturing. J Int Econ 105:130–149

    Article  Google Scholar 

  • Chishti MZ, Ullah S, Ozturk I, Usman A (2020) Examining the asymmetric effects of globalization and tourism on pollution emissions in South Asia. Environ Sci Pollut Res Int 27(22):27721–27737. https://doi.org/10.1007/s11356-020-09057-9

    Article  Google Scholar 

  • Chishti, M.Z., Ahmad, Z., Rehman, A., Khan, M, K. (2021a) Mitigations pathways towards sustainable development: Assessing the influence of fiscal and monetary policies on carbon emissions in BRICS economies, Journal of Cleaner Production,Volume 292,2021,126035, https://doi.org/10.1016/j.jclepro.2021.126035.

  • Chishti MZ, Ahmed Z, Murshed M et al (2021b) The asymmetric association between foreign direct investment, terrorism, CO2 emissions, and economic growth: a tale of two shocks. Environ Sci Pollut Res 2021. https://doi.org/10.1007/s11356-021-15188-4

  • de Sousa, J., Hering, L., & Poncet, S. (2015). Has trade openness reduced pollution in China? (No. 2015-11)

  • Duodu, A. (2018). Is Trade Bad for the Environment? Decomposing the Impact of Trade on Environmental Quality.

  • EDGAR emissions database for global atmospheric research (2020) https://edgar.jrc.ec.europa.eu/overview.php?v=booklet2020

  • Frankel JA, Rose AK (2005) Is trade good or bad for the environment? Sorting out the causality. Rev Econ Stat 87(1):85–91

    Article  Google Scholar 

  • Green Belt and Road Initiative (BRI) and 2030 SDGs (2019) Special policy study report. China council for International Cooperation on environment and development (CICED). Online: https://green-bri.org/

  • Griffiths J (2017) Just what is this One Belt, One Road thing anyway? Feature, CNN

    Google Scholar 

  • Grossman GM, Krueger AB (1991) Environmental impacts of a North American free trade agreement (No. w3914).NBER.

  • Ho SY, Iyke BN (2019) Trade openness and carbon emissions: evidence from central and eastern European countries. Rev Econ 70(1):41–67

    Article  Google Scholar 

  • Hou J, Deng X, Springer CH, Teng F (2020) A global analysis of CO2 and non-CO2 GHG emissions embodied in trade with Belt and Road Initiative countries. EHS, p 1761888

    Google Scholar 

  • Lin F (2017) Trade openness and air pollution: City-level empirical evidence from China. China Econ Rev 45:78–88

    Article  Google Scholar 

  • Ling CH, Ahmed K, Muhamad RB, Shahbaz M (2015) Decomposing the trade-environment nexus for Malaysia: what do the technique, scale, composition, and comparative advantage effect indicate? Environ Sci Pollut Res 22(24):20131–20142

    Article  CAS  Google Scholar 

  • McKenzie B (2020). BRI beyond 2020 embracing new routes and opportunities along the Belt and Road. Economist Corporate Report

  • Muhammad S, Long X, Salman M, Dauda L (2020) Effect of urbanization and international trade on CO2 emissions across 65 belt and road initiative countries. Energy 196:117102

    Article  Google Scholar 

  • Nasir M, Rehman FU (2011) Environmental Kuznets curve for carbon emissions in Pakistan: an empirical investigation. Energy Policy 39(3):1857–1864

    Article  CAS  Google Scholar 

  • Pan J (2005) Meeting human development goals with low emissions: an alternative to emissions caps for post-Kyoto from a developing country perspective. INT ENVIRON AGREEM-P 5(1):89–104

    Article  Google Scholar 

  • Porter ME, Van DLC (1995) Toward a new conception of the environment-competitiveness relationship. JEP 9(4):97–118

    Article  Google Scholar 

  • Rauf A, Liu X, Amin W, Ozturk I, Rehman OU, Sarwar S (2018) Energy and ecological sustainability: challenges and panoramas in belt and road initiative countries. Sustainability 10(8):2743

    Article  Google Scholar 

  • Roodman D (2009) How to do xtabond2: An introduction to difference and system GMM in Stata. Stata J 9(1):86–136

    Article  Google Scholar 

  • Shafik N, Bandyopadhyay S (1992) Economic growth and environmental quality: time-series and cross-country evidence (Vol. 904). World Bank Publications

  • 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

    Article  Google Scholar 

  • Sohag K, Al Mamun M, Uddin GS, Ahmed AM (2017) Sectoral output, energy use, and CO 2 emission in middle-income countries. Environ Sci Pollut Res 24(10):9754–9764

    Article  CAS  Google Scholar 

  • Sun H, Attuquaye Clottey S, Geng Y, Fang K, Clifford Kofi Amissah J (2019) Trade openness and carbon emissions: evidence from belt and road countries. Sustainability 11(9):2682

    Article  Google Scholar 

  • 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(20):5295

    Article  CAS  Google Scholar 

  • Taylor MS (2005) Unbundling the pollution haven hypothesis. B.E. J. Econ. Anal. Policy, 4(2)

  • Tiwari AK, Shahbaz M, Hye QMA (2013) The environmental Kuznets curve and the role of coal consumption in India: cointegration and causality analysis in an open economy. Renew Sust Energ Rev 18:519–527

    Article  Google Scholar 

  • Tracy EF, Shvarts E, Simonov E, Babenko M (2017) China’s new Eurasian ambitions: the environmental risks of the Silk Road Economic Belt. Eurasian Geogr Econ 58(1):56–88

    Article  Google Scholar 

  • Ullah S, Chishti MZ, Majeed MT (2020) The asymmetric effects of oil price changes on environmental pollution: evidence from the top ten carbon emitters. Environ Sci Pollut Res 27:29623–29635. https://doi.org/10.1007/s11356-020-09264-4

    Article  CAS  Google Scholar 

  • US energy information agency (2020) online database. https://www.iea.org/data-and-statistics/data-product/co2-emissions-from-fuel-combustion-highlights

  • Van Tran N (2020) The environmental effects of trade openness in developing countries: conflict or cooperation? Environ Sci Pollut Res Int 27(16):19783–19797. https://doi.org/10.1007/s11356-020-08352-9

    Article  Google Scholar 

  • Wang Q, Zhang F (2021) The effects of trade openness on decoupling carbon emissions from economic growth–evidence from 182 countries. J Clean Prod 279:123838

    Article  CAS  Google Scholar 

  • Weimin Z, Chishti MZ, Rehman A et al (2021). A pathway toward future sustainability: assessing the influence of innovation shocks on CO2 emissions in developing economies. Environment, Development and Sustainability. https://doi.org/10.1007/s10668-021-01634-3

  • World development indicators (2020) Online database. https://databank.worldbank.org/source/world-development-indicators

  • World Integrated Trade Solution (2020) online database. https://wits.worldbank.org/CountryProfile/en/Country/CHN/StartYear/2001/EndYear/2018/TradeFlow/Export/Partner/ALL/Indicator/XPRT-TRD-VL

  • Worldwide Governance Indicators (2020) online database. https://info.worldbank.org/governance/wgi/

  • Yu C, Nataliia D, Yoo SJ, Hwang YS (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

    Article  Google Scholar 

  • Zamil AM, Furqan M, Mahmood H (2019) Trade openness and CO2 emissions nexus in Oman. Entrepreneurship Sustain. Issues. 7(2), p.1319

  • Zhang CP, Feng C, Kang R (2017) Trade liberalization, financial development and chinese inter-provincial carbon emissions. J. bus. Econ. ISSN: 2155-7950

  • Zhu C, Gao D (2019) A research on the factors influencing Carbon emission of transportation industry in “the Belt and Road Initiative” countries based on panel data. Energies 12(12):24

    Google Scholar 

Download references

Availability of data and materials

The data used for estimation purposes in this research is taken from International Energy Agency (IEA) available at https://www.iea.org/data-and-statistics/data-product/co2-emissions-from-fuel-combustion-highlights, World Bank Indicators (WDI) available at https://databank.worldbank.org/source/world-development-indicators, World Integrated Trade Solution (WITS) available at https://wits.worldbank.org/CountryProfile/en/Country/CHN/StartYear/2001/EndYear/2018/TradeFlow/Export/Partner/ALL/Indicator/XPRT-TRD-VL, US Energy Information Agency (EIA) available at https://www.eia.gov/opendata/ and Worldwide Governance Indicators (WGI) available at https://info.worldbank.org/governance/wgi/.

Funding

This work was supported by the Key Project of National Social Science Fund of China (grant number 19AJY011); the Key Project of Jiangsu’s Social Science Fund (grant number 19CSJ010); and scientific Research Fund for the Fifth Phase of “333 High-level Talent Training Project” of Jiangsu Province in 2020 (grant number BRA2020038).

Author information

Authors and Affiliations

  1. School of Economics and Management, Southeast University, Jingguan Building, Dongnandaxue Road 2, Jiangning District, Nanjing, 211189, China

    Muhammad Salam & Yingzhi Xu

Authors
  1. Muhammad Salam
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Yingzhi Xu
    View author publications

    You can also search for this author in PubMed Google Scholar

Contributions

Muhammad Salam—conceptualization, collection of data, methodology, estimation of results, and article writing. Xu Yingzhi—conceptualization, supervision, and article review. Both authors read and approved the final manuscript.

Corresponding author

Correspondence to Yingzhi Xu.

Ethics declarations

Ethics approval and consent to participate

Not applicable.

Consent for publication

Not applicable.

Competing interests

The authors declare that they have no competing interests.

Additional information

Responsible Editor: Eyup Dogan

Publisher’s note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Salam, M., Xu, Y. Trade openness and environment: a panel data analysis for 88 selected BRI countries. Environ Sci Pollut Res 29, 23249–23263 (2022). https://doi.org/10.1007/s11356-021-17037-w

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11356-021-17037-w

Keywords

Search

Navigation