IDEAS home Printed from https://ideas.repec.org/a/bit/bsrysr/v14y2023i2p102-123n6.html
   My bibliography  Save this article

Economic and Environmental Sustainability through Trade Openness and Energy Production

Author

Listed:
  • Elhassan Tomader

    (Business Administration Department, Jouf University, Saudi Arabia)

Abstract

Background Energy production plays a major role in the Saudi Arabian economy, but energy production can lead to an increase in environmental pollution. Objectives:This study investigated the impact of energy production and trade openness on Saudi Arabia’s economic growth and environmental pollution using annual data from 1970 to 2020. Methods/Approach:The fully modified ordinary least squares (FMOLS) and the dynamic ordinary least squares (DOLS) methods were employed to develop two models, including an economic growth model and an environmental Sustainability or pollution model. Results:The results of the two tests ensured that both expanding trade openness and increasing energy production led to faster economic growth. Nevertheless, the expansion of trade openness and energy production also led to environmental pollution; hence, the increase in energy production did not support sustainable development. Conclusions:Thus, policymakers should develop a green economy strategy to reduce the use of fossil fuels and increase renewable energy in energy production to reduce environmental pollution. Moreover, the Saudi Arabian government should highly promote investment in renewable energy production through trade openness.

Suggested Citation

  • Elhassan Tomader, 2023. "Economic and Environmental Sustainability through Trade Openness and Energy Production," Business Systems Research, Sciendo, vol. 14(2), pages 102-123, December.
    • Handle: RePEc:bit:bsrysr:v:14:y:2023:i:2:p:102-123:n:6
    DOI: 10.2478/bsrj-2023-0014
    as

    Download full text from publisher

    File URL: https://doi.org/10.2478/bsrj-2023-0014
    Download Restriction: no
    File URL: https://libkey.io/10.2478/bsrj-2023-0014?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Choi, Yosoon & Song, Jinyoung, 2017. "Review of photovoltaic and wind power systems utilized in the mining industry," Renewable and Sustainable Energy Reviews, Elsevier, vol. 75(C), pages 1386-1391.
    2. Jie Ding & Vahid Tarokh & Yuhong Yang, 2018. "Model Selection Techniques -- An Overview," Papers 1810.09583, arXiv.org.
    3. Werner Antweiler & Brian R. Copeland & M. Scott Taylor, 2001. "Is Free Trade Good for the Environment?," American Economic Review, American Economic Association, vol. 91(4), pages 877-908, September.
    4. Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July.
    5. Eriṣ, Mehmet N. & Ulaṣan, Bülent, 2013. "Trade openness and economic growth: Bayesian model averaging estimate of cross-country growth regressions," Economic Modelling, Elsevier, vol. 33(C), pages 867-883.
    6. Aremo, Adeleke Gabriel & Arambada, Oluwaseun David, 2021. "Effect of Trade Openness and Financial Openness on Economic Growth in Sub-Saharan African Countries," African Journal of Economic Review, African Journal of Economic Review, vol. 9(01), January.
    7. Cemal Atici, 2009. "Carbon emissions in Central and Eastern Europe: environmental Kuznets curve and implications for sustainable development," Sustainable Development, John Wiley & Sons, Ltd., vol. 17(3), pages 155-160.
    8. Peter C. B. Phillips & Bruce E. Hansen, 1990. "Statistical Inference in Instrumental Variables Regression with I(1) Processes," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(1), pages 99-125.
    9. Prelipcean, Gabriela & Boscoianu, Mircea, 2020. "An Innovative Flexible Investment Vehicle Oriented to Sustainability – The Adaptation of Hedge Funds in the Case of Emerging Markets," Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference (2020), Virtual Conference, in: Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Virtual Conference, 10-12 September 2020, pages 493-503, IRENET - Society for Advancing Innovation and Research in Economy, Zagreb.
    10. Malefa Rose Malefane & Mariam Camarero, 2020. "Trade openness and economic growth in Botswana: Evidence from cointegration and error-correction modelling," Cogent Economics & Finance, Taylor & Francis Journals, vol. 8(1), pages 1783878-178, January.
    11. Abdulrahman Al-Shayeb & Abdulnasser Hatemi-J, 2016. "Trade openness and economic development in the UAE: an asymmetric approach," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 43(4), pages 587-597, September.
    12. Ioanna Vlastou, 2010. "Forcing Africa to open up to trade:is it worth it?," Journal of Developing Areas, Tennessee State University, College of Business, vol. 44(1), pages 25-39, September.
    13. Adom, Philip Kofi & Bekoe, William, 2013. "Modelling electricity demand in Ghana revisited: The role of policy regime changes," Energy Policy, Elsevier, vol. 61(C), pages 42-50.
    14. Danish & Bin Zhang & Zhaohua Wang & Bo Wang, 2018. "Energy production, economic growth and CO2 emission: evidence from Pakistan," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 90(1), pages 27-50, January.
    15. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    16. Chi Aloysius Ngong & Kesuh Jude Thaddeus & Lionel Tembi Asah & Godwin Imo Ibe & Josaphat Uchechukwu Joe Onwumere, 2022. "Stock market development and agricultural growth of emerging economies in Africa," Journal of Capital Markets Studies, Emerald Group Publishing Limited, vol. 6(2), pages 185-202, February.
    17. Fuzhong Chen & Guohai Jiang & Getachew Magnar Kitila, 2021. "Trade Openness and CO 2 Emissions: The Heterogeneous and Mediating Effects for the Belt and Road Countries," Sustainability, MDPI, vol. 13(4), pages 1-16, February.
    18. Rabail Amna Intisar & Muhammad Rizwan Yaseen & Rakhshanda Kousar & Muhammad Usman & Muhammad Sohail Amjad Makhdum, 2020. "Impact of Trade Openness and Human Capital on Economic Growth: A Comparative Investigation of Asian Countries," Sustainability, MDPI, vol. 12(7), pages 1-19, April.
    19. Dong-Hyeon Kim, 2011. "Trade, growth and income," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 20(5), pages 677-709, July.
    20. Lingaraj Mallick & Smruti Ranjan Behera & Juan Sapena, 2020. "Does trade openness affect economic growth in India? Evidence from threshold cointegration with asymmetric adjustment," Cogent Economics & Finance, Taylor & Francis Journals, vol. 8(1), pages 1782659-178, January.
    21. Menyah, Kojo & Nazlioglu, Saban & Wolde-Rufael, Yemane, 2014. "Financial development, trade openness and economic growth in African countries: New insights from a panel causality approach," Economic Modelling, Elsevier, vol. 37(C), pages 386-394.
    22. Le, Thi Ngoc Lan & Nasir, Muhammad Ali & Huynh, Toan Luu Duc, 2023. "Capital requirements and banks performance under Basel-III: A comparative analysis of Australian and British banks," The Quarterly Review of Economics and Finance, Elsevier, vol. 87(C), pages 146-157.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vo, D.H. & Nguyen, H.M. & Vo, A.T. & McAleer, M.J., 2019. "CO2 Emissions, Energy Consumption and Economic Growth," Econometric Institute Research Papers EI2019-11, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    2. Hakimi, Abdelaziz & Hamdi, Helmi, 2016. "Trade liberalization, FDI inflows, environmental quality and economic growth: A comparative analysis between Tunisia and Morocco," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1445-1456.
    3. Vo, Duc Hong & Vo, Anh The & Ho, Chi Minh & Nguyen, Ha Minh, 2020. "The role of renewable energy, alternative and nuclear energy in mitigating carbon emissions in the CPTPP countries," Renewable Energy, Elsevier, vol. 161(C), pages 278-292.
    4. Shahbaz, Muhammad & Mallick, Hrushikesh & Kumar, Mantu & Loganathan, Nanthakumar, 2015. "Does Globalization Impede Environmental Quality in India?," MPRA Paper 67285, University Library of Munich, Germany, revised 15 Oct 2015.
    5. Farhani, Sahbi & Chaibi, Anissa & Rault, Christophe, 2014. "CO2 emissions, output, energy consumption, and trade in Tunisia," Economic Modelling, Elsevier, vol. 38(C), pages 426-434.
    6. Shahbaz, Muhammad & Mallick, Hrushikesh & Mahalik, Mantu Kumar & Sadorsky, Perry, 2016. "The role of globalization on the recent evolution of energy demand in India: Implications for sustainable development," Energy Economics, Elsevier, vol. 55(C), pages 52-68.
    7. repec:ipg:wpaper:2014-582 is not listed on IDEAS
    8. Muhammad Shahbaz, 2022. "Globalization–Emissions Nexus: Testing the EKC Hypothesis in Next-11 Countries," Global Business Review, International Management Institute, vol. 23(1), pages 75-100, February.
    9. Shahbaz, Muhammad, 2019. "Globalization-Emissions Nexus: Testing the EKC hypothesis in Next-11 Countries," MPRA Paper 93959, University Library of Munich, Germany, revised 13 May 2019.
    10. Jason Allen & Robert Amano & David P. Byrne & Allan W. Gregory, 2009. "Canadian city housing prices and urban market segmentation," Canadian Journal of Economics, Canadian Economics Association, vol. 42(3), pages 1132-1149, August.
    11. Arshian Sharif & Sahar Afshan, 2018. "Does Military Spending Impede Income Inequality? A Comparative Study of Pakistan and India," Global Business Review, International Management Institute, vol. 19(2), pages 257-279, April.
    12. Tang, Chor Foon & Tan, Eu Chye, 2015. "Does tourism effectively stimulate Malaysia's economic growth?," Tourism Management, Elsevier, vol. 46(C), pages 158-163.
    13. Ansgar Belke & Robert Czudaj, 2010. "Is Euro Area Money Demand (Still) Stable? Cointegrated VAR Versus Single Equation Techniques," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 56(4), pages 285-315.
    14. Ansgar Belke & Robert Czudaj, 2010. "Is Euro Area Money Demand (Still) Stable? – Cointegrated VAR versus Single Equation Techniques," Ruhr Economic Papers 0171, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    15. Miguel Ángel Mendoza González, 2020. "Sensibilidad y asimetrías ante choques de ingreso en el consumo privado de México, 1995-2017. (Sensitivity and asymmetries of income shocks in Mexico's private consumption, 1995-2017)," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(1), pages 21-58, May.
    16. Sugra Humbatova & Afag Huseyn & Natig Gadim-Oglu Hajiyev, 2023. "Impact of Oil Factor on Investment: The Case of Azerbaijan," International Journal of Energy Economics and Policy, Econjournals, vol. 13(2), pages 129-148, March.
    17. Arize, Augustine C., 2002. "Imports and exports in 50 countries: Tests of cointegration and structural breaks," International Review of Economics & Finance, Elsevier, vol. 11(1), pages 101-115, April.
    18. Bunzel, Helle, 2006. "FIXED-b ASYMPTOTICS IN SINGLE-EQUATION COINTEGRATION MODELS WITH ENDOGENOUS REGRESSORS," Econometric Theory, Cambridge University Press, vol. 22(4), pages 743-755, August.
    19. Haug, Alfred A., 1996. "Tests for cointegration a Monte Carlo comparison," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 89-115.
    20. Farhani, Sahbi & Mrizak, Sana & Chaibi, Anissa & Rault, Christophe, 2014. "The environmental Kuznets curve and sustainability: A panel data analysis," Energy Policy, Elsevier, vol. 71(C), pages 189-198.
    21. Farhani, Sahbi & Shahbaz, Muhammad & Arouri, Mohamed & Teulon, Frédéric, 2014. "The role of natural gas consumption and trade in Tunisia's output," Energy Policy, Elsevier, vol. 66(C), pages 677-684.

    More about this item

    Keywords

    pollution; growth; Saudi Arabia; FMOLS; DOLS;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • F1 - International Economics - - Trade
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bit:bsrysr:v:14:y:2023:i:2:p:102-123:n:6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.sciendo.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.