Is Globalization Harmful for Environment?

Abstract

Globalization is an on-going process of global integration that encompasses economic integration through trade, investment and capital flows, political interaction and information technology that all dimensions of globalization affect the natural environment. We develop a model to divide trade’s impact on pollution into scale, technique, and composition effects and then examine this theory using data on carbon dioxide concentrations. In addition, this paper asks whether the environmental Kuznets curve hypothesis, which admits the existence of an inverted U-shaped relationship between economic growth and environmental degradation, is in reality for the sample. By using a panel data for MENA region during 1990-2010, we conclude openness reduces the production of pollution. Also, by estimating a quadratic relationship between per capita income and pollution and by employing GLS method, we are able to deduce a U-shaped relation between income and CO₂ emission.

Keywords: globalization, environment degradation, environmental Kuznets curve, MENA