Abstract
This study compares the nexus among trade liberalization, CO2 emissions, energy consumption, and economic growth in Southeast Asian and Latin American countries. We apply the structural equation modeling approach for estimation analysis of the data from 1991 to 2018. The empirical findings of this study validate that trade has a positive and statistically significant effect on energy consumption, CO2 emissions, and gross domestic product (GDP) in Southeast Asian countries. Whereas in Latin American countries, trade shows a positive insignificant impact on energy consumption, but the coefficients for both CO2 emissions and GDP are positive and statistically significant. Energy consumption also exhibits a positive significant effect on CO2 emissions and a positive statistically insignificant effect on GDP in the Southeast Asian region. However, in Latin American countries, energy consumption predicts a positive and statistically significant impact on both CO2 emissions and GDP. Whereas, CO2 emissions indicate a positive significant effect on GDP in both regions. Therefore, each country’s government in both areas should formulate appropriate policies to promote green technologies in the production and exports, which could help economies to achieve a clean environment and sustainable long-term development.
Highlights
Trade has been extensively discussed with CO2 emissions, energy consumption, and gross domestic product (GDP) in the literature; the regional comparison is still not being undertaken
Trade liberalization has been adopted in both Latin American and Southeast Asian countries, which significantly contributed to the development in those regions
Trade liberalization has been found as a key determinant of environmental quality, which significantly contributing to CO2 emissions, energy consumption, and economic growth in any country
Summary
Trade has been extensively discussed with CO2 emissions, energy consumption, and gross domestic product (GDP) in the literature; the regional comparison is still not being undertaken. We extended the existing literature on trade, CO2 emissions, energy consumption, and economic growth by using the case of more regions, i.e., Southeast Asian and Latin American countries. The emergence of trade openness in developing countries has got attention as many Southeast Asian economies achieved substantial economic growth. In later stage, countries give more attention to reduces CO2 emissions; in later stage, it reduces CO2 emissions Both trade and economic growth are based on agriculture production, which requires high-level energy consumption. The comparative analysis of various regions such as Southeast Asia and Latin American may provide the success of trade policies and their implications for the environment, CO2 emissions, energy consumption, and GDP. This paper uses a novel statistical technique known as the “structural equation model (SEM)”, which is a novel approach that provides a more robust empirical estimation for complex models and prominent policy implications for the policymakers in these various countries and regions
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