The relationship between urbanization, technology innovation, trade openness, and CO2 emissions: evidence from a panel of Asian countries.

Abstract

This paper explores the dynamic relationship between CO2 emissions, urbanization, trade openness, and technology innovation based on the panel data of 13 Asian countries over the period of 1985-2019. The STIRPAT model is used as a framework for the analysis. For estimation purpose, panel cointegration and FMOLS techniques are utilized. The causality between the concerned variables is also examined by estimating a panel VECM model. The results of panel cointegration reveal the presence of long-run relationship among the variables. FMOLS estimations show that energy consumption increases CO2 emissions while technology change, urbanization, and trade openness compact it. Panel causality analysis indicates bidirectional causality between urbanization and emissions, technology and emissions, trade and emissions, and trade and technology in the long run. Overall findings support the idea that urbanization, technology innovation, and trade openness can play important role to achieve environmental sustainability.