Abstract
We investigated the asymmetrical effects of trade openness on CO2 emissions and the environmental Kuznets curve (EKC) hypothesis in Tunisia during the period 1971–2014. The integration analysis suggests a mixed order of integration and the cointegration analysis corroborates the long- and short-run relationships. The EKC was proved true with a turning point gross domestic product (GDP) of approximately 292.335 billion constant US dollars, and Tunisia was found at the first phase of EKC. Moreover, we corroborate the asymmetrical effects of trade openness on CO2 emissions. The effects of increasing and decreasing trade openness are found to be positive and insignificant on CO2 emissions, respectively. The pollution haven hypothesis is found to be true in Tunisia, along with negative environmental effects associated with increasing foreign trade.
Highlights
Free trade is likely to have negative or positive environmental effects due to the effects of scale, technique, and composition [1]
We apply this test on the first differenced variables and find that all variables are stationary after first differencing. ∆GDPt, ∆TONt and TOt are stationary at the 5% level of significance in all statistics. ∆CO2t is stationary at the 5% level of significance in MZt and MPT and at the 10% level of significance in MZa and MSB. ∆TOPt is stationary at the 5% level of significance in MZa, MZt and MPT and at the 10% level of significance in MSB
We tested the effects of trade openness and income on CO2 emissions in Tunisia using a maximum available annual series during the period 1976–2014
Summary
Free trade is likely to have negative or positive environmental effects due to the effects of scale, technique, and composition [1]. Economic growth generally has a negative environmental effect at the first phase of development due to the scale effect of increasing energy consumption It could have a positive environmental effect at the later stage due to the effects of composition and/or technique. Later in the development process, economic growth promotes an increase in the demand for a cleaner environment in order to attain a higher standard of living For this purpose, dirty production processes are replaced with clean production processes, or with the service sector, which is termed as the composition effect. Increasing economic growth is responsible for environmental degradation at the earlier stages of the development process, and helps to improve the environment at the later stages This quadratic effect is known as the environmental Kuznets curve (EKC) hypothesis [2,3]. Recent empirical studies have tested and corroborated the existence of the EKC hypothesis [4,5,6]
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