Trade openness and environment: a panel data analysis for 88 selected BRI countries.

Abstract

In 2013, the Chinese government officially announced the Belt and Road Initiative (BRI). Since then, environmentalists have raised concerns regarding the environmental impact of trade between China and BRI countries. Therefore, the current study aims to analyze the environmental impact of the two aspects of BRI countries' trade: First, it examines the environmental impact of trade openness between China and BRI countries. Second, it examines the environmental impact of trade openness among BRI countries. For this purpose, the current study employs the two-step system GMM model with a panel dataset for the period 2001-2018. The results obtained for the whole sample of 88 selected BRI countries suggest that the trade openness between China and BRI countries significantly reduces CO2 emissions. However, the trade openness among BRI countries has no significant effect on CO2 emissions. In addition, BRI countries' exports to China do not have a significant effect on CO2 emissions. However, BRI countries' imports from China significantly reduce CO2 emissions in these countries. The results obtained for the subsamples of BRI countries suggest that the trade openness between China and BRI countries, BRI countries' exports to China, and BRI countries' imports from China have no significant effect on CO2 emissions in both low-income and high-income BRI countries. Moreover, the trade openness among BRI countries significantly increases CO2 emissions in low-income BRI countries only.