Nexus Between Trading Non-Green Products and Environment: Introducing Non-Green Trade Openness Index

Abstract

Trade is a significant parameter that may impact environment positively or negatively. However, there is no consensus on this issue among the researchers. It seems likely that tradable products will affect the environmental quality level. However, this requires the separation of the international trade basket. Thus, this research asks whether trade in non-green products affects the level of environmental degradation in the 25 European Union (EU) member states? To answer this question, we develop an index of trade openness in non-green products and empirically investigate whether this index influences the ecological footprint. Non-green trade openness index represents the ratio of the total export and import of non-green products in a country’s international trade basket to that country’s Gross Domestic Product. Advanced panel estimation techniques are employed for a sample of 25 EU countries over the period between 2003 and 2016. The core finding–supporting the Pollution Haven Hypothesis–is that non-green trade openness reduces environmental degradation. We discuss several implications of this result for recent environmental policies, particularly for the EU climate policy.

The synergistic effect of green trade and economic complexity on sustainable environment: A new perspective on the economic and ecological components of sustainable development

“…The review of extant literature on trade and environment clearly shows that the focus of past studies has been on overall trade patterns, no effort has so far been made to specifically investigate the environmental impact of the green trade component. Can et al (2022), in a panel study of 25 European Union member countries, find evidence in support of the pollution haven hypothesis. On the basis of the study findings, they claim that non‐green trade openness lowers pollution.…”

Investigating the Relationship and Impact of Environmental Governance, Green Goods, Non-Green Goods and Eco-Innovation on Material Footprint and Renewable Energy in the BRICS Group

“…There are several explanations for this association. Production of non-green commodities frequently requires large quantities of energy, mostly from fossil fuels [48] in the BRICS nations. This dependence on fossil fuels hinders the switch to renewable energy sources by increasing greenhouse gas emissions and environmental damage.…”

Toward a Greener Future: Investigating the Environmental Quality of Non-Green Trading in OECD Countries

“…Climate change can be described as one of the most pressing challenges of our time [1,2]. Undeniably, global warming is caused by human activities, and climate scientists stress the urgency for immediate action [3].…”

“…The consequences of global warming include extreme weather events, the melting of glaciers resulting in rising sea levels, and major risks to biodiversity, key infrastructure, and food availability [4]. International trade is one of the human activities that has a major impact on the environment: it causes 20% of global carbon emissions [1]. Xu et al [5] confirmed that, on average, 20-30% of global greenhouse gas (GHG) emissions are created by producing and transporting goods and services.…”

“…It can be said that the relationship between international trade and the environment is complex. There are both beneficial and harmful consequences, but there is no consensus among researchers regarding the net impact of international trade on the environment [1]. For that reason, it is important to understand the connection between economic development and environmental degradation.…”