Does trade openness improve environmental quality?

Shunsuke Managi, Akira Hibiki, Tetsuya Tsurumi

Research output: Contribution to journalArticle

191 Citations (Scopus)

Abstract

The literature on trade openness, economic development, and the environment is largely inconclusive about the environmental consequences of trade. This study treats trade and income as endogenous and estimates the overall impact of trade openness on environmental quality using the instrumental variables technique. We find that whether or not trade has a beneficial effect on the environment varies depending on the pollutant and the country. Trade is found to benefit the environment in OECD countries. It has detrimental effects, however, on sulfur dioxide (SO2) and carbon dioxide (CO2) emissions in non-OECD countries, although it does lower biochemical oxygen demand (BOD) emissions in these countries. We also find the impact is large in the long term, after the dynamic adjustment process, although it is small in the short term.

Original languageEnglish
Pages (from-to)346-363
Number of pages18
JournalJournal of Environmental Economics and Management
Volume58
Issue number3
DOIs
Publication statusPublished - Nov 1 2009
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Management, Monitoring, Policy and Law

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