Export quality upgrading and environmental sustainability: Evidence from the East Asia and Pacific Region

Abstract

In this study, we examine the effect of export quality upgrading through evolution of energy mix and transportation on environmental sustainability using panel cointegration techniques. Utilizing a dataset of East Asia and Pacific countries, we find that the export quality amelioration of goods and services tends to increase the carbon-produced intensity. Economically, a 1% rise in the export quality index could surge CO2 emissions by 0.71%. However, such a relationship is nonlinear as reflected through an inverted U-shaped linkage between export quality and environmental performance, i.e., evolution in energy use, economic growth, transportation and trade openness can reduce CO2 emissions when it reaches a certain threshold. The main results survive when we re-estimate all models by substituting production-based CO2 emissions by Consumption Emissions and Economic Complexity Index of Hidalgo and Haussmann.