This study investigates the relationship between trade openness and carbon dioxide (CO2) emissions among ASEAN-5 countries (Indonesia, Malaysia, Philippines, Singapore, and Thailand) during the period from 1995 to 2014. The variables used are trade openness, carbon dioxide emissions, gross domestic product, energy consumption, and foreign direct investment. Methodologies applied in this study are Panel Unit Root test, Pedroni Co-integration test, and Panel Granger Causality. The results of this study show there is a long-run relationship between the variables in ASEAN-5 countries. The results further show there is a bidirectional causal relationship between carbon dioxide, economic growth, and energy consumption in the short- run. The results of this study imply that ASEAN policy makers should focus on the implementation of carbon tariff and promote the energy efficiency usage.
In-Text Citation: (Ling et al., 2020)
To Cite this Article: Ling, T. Y., Ab-Rahim, R., & Mohd-Kamal, K.-A. (2020). Trade Openness and Environmental Degradation in Asean-5 Countries. International Journal of Academic Research in Business and Social Sciences, 10(2), 691–707.
Copyright: © 2020 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode
Vol. 10, No. 2, 2020, Pg. 691 – 707
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Trade Openness and Environmental Degradation in Asean-5 Countries
Tham Yee Ling, Rossazana Ab-Rahim & Khairil-Annuar Mohd-Kamal
Faculty of Economics & Business, Universiti Malaysia Sarawak, Malaysia.
Email: rossazana@gmail.com
Abstract
This study investigates the relationship between trade openness and carbon dioxide (CO2) emissions among ASEAN-5 countries (Indonesia, Malaysia, Philippines, Singapore, and Thailand) during the period from 1995 to 2014. The variables used are trade openness, carbon dioxide emissions, gross domestic product, energy consumption, and foreign direct investment. Methodologies applied in this study are Panel Unit Root test, Pedroni Co-integration test, and Panel Granger Causality. The results of this study show there is a long-run relationship between the variables in ASEAN-5 countries. The results further show there is a bidirectional causal relationship between carbon dioxide, economic growth, and energy consumption in the short- run. The results of this study imply that ASEAN policy makers should focus on the implementation of carbon tariff and promote the energy efficiency usage.
Keywords: Environmental Degradation, Trade Openness, Cointegration, Granger Causality.
Introduction
Trade openness enables domestic industrial sector of a country to expand more rapidly as compared to a closed economy. Economic growth can be accelerated by trade openness with the agreement of trade among countries (Sulaiman & Abdul-Rahim, 2017). There are number of agreements on international trade among the countries about tariffs, imports and exports such as General Agreement on Tariffs and Trade (GATT) and World Trade Organisation (WTO). A bilateral and multilateral Free Trade Agreement (FTA) among countries can minimize the trade barrier in their economic relationship. Trade liberalization is good for economy in terms of prices, investments, productivities and so on. On contrary, trade openness causes policy of aggressive market entry, intricacy of the system of international trading, and structural unemployment (Drozdz & Miskinis, 2011).
Emphasizing on the gains from trade towards the environmental quality is referred as the hypothesis of gain-from-trade while race-to-the-bottom hypothesis is referred for the nation’s racing to the bottom of environmental quality in aiming for the development of trade-led (Ibrahim & Rizvi, 2015). Furthermore, based on Managi (2004), there will be both positive and negative impacts on the environment when trade openness occurred internationally. The effects of scale, technique, and composition are the three pieces of impacts that can be decomposed. When there isa development on trade-led, an increasing of income can be seen. It is because trade involves import and export that need the calculation of exchange rates for the price and so on. After raising the income, the people or public start to demand a cleaner environment for living. In addition, the tec
In-Text Citation: (Ling et al., 2020)
To Cite this Article: Ling, T. Y., Ab-Rahim, R., & Mohd-Kamal, K.-A. (2020). Trade Openness and Environmental Degradation in Asean-5 Countries. International Journal of Academic Research in Business and Social Sciences, 10(2), 691–707.
Copyright: © 2020 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode
