The moderating effects of democracy and technology adoption on the relationship between trade liberalisation and carbon emissions

Abstract

This paper examines carbon emission growth rates in 35 OECD economies from 1970 to 2019. It analyses the effects of trade liberalisation policy on carbon emissions in interaction with democracy. Both variables serve as potential drivers of adopting emission-reducing technologies. It is observed that trade liberalisation increases carbon dioxide emissions; however, democracy reduces the carbon emission growth rates. In addition, the interaction of trade liberalisation with democracy has a positive impact on carbon dioxide emissions. These findings mean that trade liberalisation has a lessened negative effect on carbon dioxide emissions in more democratic countries. These results indicate several policy implications for the climate change crisis, given that policymakers in democracies do a better job of providing policy formation for climate change than autocracies.