Abstract
Over the years, world market is integrating at much faster pace through increasing trade openness. Not being an unmixed blessing, consistent efforts have been made to examine impact of trade openness on economic, environmental and social welfare. This study is an attempt to empirically examine the implications of trade openness on sustainable development in India since liberalization policy 1991. We used the Autoregressive Distributed Lag (ARDL) model to test the relationship between sustainable development and trade openness along with other control variables that are supposed to affect sustainable development. The results established supports the opinion of environmentalists. The empirical results are contrary to the conventionally held belief, indicating that trade shares a negative correlation with green GDP growth and positive correlation with gap between conventional GDP and green GDP. These findings support the arguments that trade openness tend to be both distorting and detrimental to the future generations.
Highlights
The increasing globalization has constantly changed the world
We examined the implications of trade openness on one of the World Bank’s composite weak sustainability measure known as genuine savings (GS)
We found that cross-border trade reduces green GDP significantly and increases the gap between GDP and green-GDP in india
Summary
The increasing globalization has constantly changed the world. Over the past few decades, radical social economic and environmental moves have taken place. The rapid liquidation of natural and social capital has led to daunting problems of global warming, ozone depletion, biodiversity loss, impoverishment and unequal distribution of wealth. These issues have placed the ‘sustainable development’ policy objective at the centre of the policy action. Trade remains a contentious issue in any developmental discussion without a quick fix solution for its ability to affect either way the economy, culture and climate. We believe that this issue can be resolved by taking alternative welfare measures instead of simple GDP growth rates. If trade openness promotes sustainability, as proponents claim, such improvement should be indicative of its impact on economic, social and environmental capital
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