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Do Trade and Investment Flows Lead to Higher CO2 Emissions? Some Panel Estimation Results

Author

Listed:
  • Debashis Chakraborty

    (Indian Institute of Foreign Trade, Kolkata, India)

  • Sacchidananda Mukherjee

    (National Institute of Public Finance and Policy, New Delhi, India)

Abstract

Over the last decade cross-country trade and investment flows have increased considerably, which is often linked to climate change concerns. The present analysis attempts to understand the influence of trade and investment flows on CO2 emissions through panel data model estimation for a set of 181 countries over 1990-2009. The empirical findings confirm that both in case of lower and higher income countries, higher merchandise trade growth in general and service and merchandise export growth in particular leads to the higher CO2 emission growth in their territories. Both FDI inward and outward stock is found to be positively related to CO2 emission, reflecting a complementary relationship between the two. The empirical results indicate that the composition, scale and technology effects significantly influence the trade-climate change interrelationship.

Suggested Citation

  • Debashis Chakraborty & Sacchidananda Mukherjee, 2013. "Do Trade and Investment Flows Lead to Higher CO2 Emissions? Some Panel Estimation Results," Working Papers 1321, Indian Institute of Foreign Trade.
    • Handle: RePEc:ift:wpaper:1321
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    More about this item

    Keywords

    environment and trade; foreign direct investment; climate change; democracy.;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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