Trade Openness and Environmental Degradation in Asean-5 Countries

Tham, Yee Ling and Rossazana, Ab Rahim and Khairil Annuar, Mohd Kamal (2020) Trade Openness and Environmental Degradation in Asean-5 Countries. International Journal of Academic Research in Business and Social Sciences, 10 (2). pp. 691-707. ISSN 2222-6990

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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.

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