International Trade and CO2 Emissions: A Dynamic Panel Data Analysis by the STIRPAT Model

Abstract

This paper focuses on the study of the effect of international trade on CO₂ emissions. The study focuses on a dynamic panel of 176 countries over the period 1995-2012. On the first hand, we will proceed to the estimation of STIRPAT model. Then, we will test the effect of trade and trade intensity with developed countries on CO₂ emissions. The results have been proven with The Environmental Kuznets Curve in the case of the total sample and for developed and developing countries. Concerning the case of the effect of international trade on CO₂ emissions, the results show that international trade increases pollution in developed and developing countries. In the developing countries, pollution increases because of their trade with developed countries. However, if the developed countries trade together the CO₂ emissions are reduced.

Keywords: International Trade- CO₂ Emissions- ECK