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The Impact of International Trade on Environmental Quality: Implications for Law

  • Ngoc-Tham Pham , Trung-Kien Pham , Viet Hieu Cao , Ha Giang Tran and Xuan Vinh Vo EMAIL logo
Published/Copyright: April 28, 2020
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Asian Journal of Law and Economics
From the journal Asian Journal of Law and Economics Volume 11 Issue 1

Abstract

Our study illuminates the impact of international trade on environmental quality in lower-middle-income countries by using CO2 emission as the proxy for environmental degradation. Using the Pooled Mean Group estimation along with validity tests, the results show that in the long run, CO2 emission is affected by merchandise export, merchandise import, FDI, GDP per capita, and renewable energy consumption. The impact of trade on CO2 emission is mixed because our findings show that merchandise export and import have opposite effects. In addition, our results reveal that Environmental Kuznets Curve exists in the long run with N-sharped. The increase in GDP per capita leads to the raise of CO2 emission at first, but later comes the decrease and then increase. The paper has relevant implications for law makers.

Keywords: CO2 emission; Environmental Kuznets Curve; export; import
JEL Classification: F18; Q56

Appendix

Table 5:

The Results of Static Models.

Variables (1)
 (2)
(FEM) (REM) (FEM) (REM)
MEXP −0.127 −0.0318 −0.0940 −0.00629
(0.121) (0.121) (0.116) (0.115)
MIMP 0.444*** 0.402*** 0.447*** 0.406***
(0.123) (0.122) (0.118) (0.117)
FDI 0.0137 0.0221 0.00825 0.0198
(0.167) (0.169) (0.160) (0.161)
lnGDPpc −0.0466 0.258 45.14*** 46.96***
(0.576) (0.576) (6.928) (6.879)
lnGDPpc_sq 0.0316 0.0114 −6.223*** −6.462***
(0.0390) (0.0390) (0.957) (0.951)
lnGDPpc_tr 0.287*** 0.297***
(0.0439) (0.0436)
REC −1.701*** −1.799*** −1.732*** −1.814***
(0.164) (0.148) (0.157) (0.143)
Constant −1.052 −2.161 −109.2*** −113.8***
(2.138) (2.133) (16.66) (16.52)
Observations 528 528 528 528
R-squared 0.487 0.529
F test 75.63 76.61
Prob > F 0.000 0.000
F test ui = 0 (Prob > F) 0.000 0.000
Wald χ2 (Prob > χ2) 0.000 0.000
Number of id 44 44 44 44

  1. This table presents the Fixed Effects and Random Effects regression results of the equations (1) CO2it=α0+α1MEXPit+α2MIMPit+α3FDIit+α4GDPpc+α5GDPpcsqit+α6RECit+μi+εit and (2) CO2it=α0+α1MEXPit+α2MIMPit+α3FDIit+α4GDPpc it+α5GDPpc_sq it+α6GDPpc_tr it+α7RECit+μi+εit. The dependent variable is CO2 which calculated as the logarithm of CO2 emission. MEXP and MIMP are measured as the ratios of merchandise exports and merchandise imports on GDP, respectively. FDI is calculated as the ratio of net FDI inflow on GDP. GDPpc is per capita real GDP. GDPpc_sq and GDPpc_tr are the quadratic and cubic forms of per capita real GPD, respectively. REC is renewable energy consumption, defined as the ratio of renewable energy consumption on total final energy consumption.

  2. Standard errors are given in the parentheses. The symbols ***, **, * indicate the statistical significance at the 1%, 5%, and 10% levels, respectively.

  3. FEM denotes Fixed effect model. REM denotes Random effect model.

Table 6:

Hausman Test’s Results.

(1) (2)
χ2 (6) 74.91 63.11
Prob > χ2 0.0000 0.0000
Table 7:

The Results of Test Assumption Regression Fixed Effects.

(1) (2)
Modified Wald statistic for groupwise heteroskedasticity
 χ2 (44) 53329.86 22201.22
 Prob > χ2 0.000 0.000
Wooldridge test for serial correlation
 F(1,43) 53.702 51.487
 Prob > F 0.000 0.000
Pesaran test for cross-sectional dependence
 Pesaran 0.980 1.676
 Pr 0.327 0.094

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Published Online: 2020-04-28

© 2020 Walter de Gruyter GmbH, Berlin/Boston

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  1. Research Articles
  2. Legal Contests with Unilateral Delegation
  3. The Impact of International Trade on Environmental Quality: Implications for Law
  4. Research on Bankruptcy Trustee’s Right of Rescission of Contract
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https://doi.org/10.1515/ajle-2020-0001
Keywords for this article
CO2 emission; Environmental Kuznets Curve; export; import

Articles in the same Issue

  1. Research Articles
  2. Legal Contests with Unilateral Delegation
  3. The Impact of International Trade on Environmental Quality: Implications for Law
  4. Research on Bankruptcy Trustee’s Right of Rescission of Contract
  5. The Impact of Auditor Specialization and Banks’ Listing Status on Earnings Management in Vietnamese Commercial Banks
  6. Guns and Butter: Stability and Robustness
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