Abstract
This study attempts to examine the relationship between Free Trade Agreements (FTAs) and Carbon Dioxide (CO2) emissions in Pakistan. Panel unit root, panel co-integration, and Fully Modified OLS (FMOLS) estimators were employed to investigate the existence of long-run relationship between Gross Domestic Product (GDP), Trade openness (TO) and energy consumption (EC) with CO2 emissions in Pakistan from 1980 to 2014. The results show that GDP per capita have a significant positive effect on CO2 emissions. This implies that an increase in GDP per capita increases CO2 emissions and show a scale effect. The results also indicate the existence of long run positive relationship of energy consumption on carbon emission and negative relationship with trade openness and FTA. This research is helpful for policy makers to eliminate the negative impact by adopting appropriate policy instruments and promote Pakistan's trade in the international market.
Highlights
In accordance with traditional theory of trade, economists believe that open economies perform better than closed ones
According to the environmental Kuznet curve (EKC) hypothesis, environmental degradation increases when an economy is at initial level of economic growth, and decreases when it is at higher level of growth
Co-integration analysis in Autoregressive Distributed Lag (ARDL) has many advantages compared to other approach and this is the method that will be used in this study
Summary
In accordance with traditional theory of trade, economists believe that open economies perform better than closed ones. The underlying concept is that trade has significant impact on economic development. Debate on the trade-growth nexus is certainly not new. A theoretical concept that shapes this discussion is of the environmental Kuznets.. According to the environmental Kuznet curve (EKC) hypothesis, environmental degradation increases when an economy is at initial level of economic growth, and decreases when it is at higher level of growth. With the given pollution coefficients, more production is dangerous to the atmosphere and scale effect is said to be negative because it triggers added emissions and pollution. Change in specialization due to more free trade explains the composition effect
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: Policy Perspectives: The Journal of the Institute of Policy Studies
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
