The Impact of Trade, Technology and Growth on Environmental Deterioration of China and India

Abstract

The aim of this study is to investigate the impact of Trade openness, Technological Innovation, and Economic growth on the Environmental deterioration of China and India over the period of 1974–2016. These two largest transitional and emerging countries of Asia have gained miraculous development in many sectors but at the cost of Environmental deterioration. We have applied the ARDL Bounds Test methodology and Toda- Yamamoto Granger Non-Causality test to determine the short-run and long-run relationships of the variables. The results of the study illustrate that Technological innovation has a significant positive impact and Economic growth has a strong 0adverse effect on the Environmental deterioration of China in the long-run. But it is not so strong in the short-run. In the case of India, Trade openness and Economic growth have a significant positive impact and Technological innovation has a strong negative effect on Environmental deterioration in the long-run. The selected macro-economic explanatory variables have a significant impact on the Environmental deterioration of India in the short-run as well. The results of ARDL bounds test are also supported by Toda- Yamamoto Granger Non-Causality test. To compare China and India, Trade openness has a significant impact on the Environmental deterioration of India, but it is not factual for China. In addition, Technological innovation and Economic growth have an inverse relationship on the Environmental deterioration of both the Countries. The findings of this study have an important policy implication for China and India.