Effect of trade on ecological quality: a case of D-8 countries

Abstract

Sustainable development inculcates the process of preserving the environment for future generations while maintaining existing human needs. This study attempts to empirically investigate the relationship between CO2 emissions, GDP, energy consumption, and imports and exports using yearly data between 1980 and 2014 for the panel of eight developing countries (i.e., Bangladesh, Egypt, Iran, Indonesia, Malaysia, Nigeria, Pakistan, and Turkey). All the tests for cointegration establish the long-run association among the variables and confirm the environmental Kuznets curve (EKC) hypothesis for the panel of eight countries. GDP and energy consumption remained significant factors for emission intensity both in the long and short run. However, exports found to be positive factor for emissions in the long run only and imports spur emissions in the short run. The country-specific results validate EKC hypothesis for Bangladesh, Iran, Nigeria, Pakistan, and Turkey. The findings are policy oriented and suggest that the countries’ economic growth along with energy consumption and exports are highly emission intensive which require necessary adjustments at sustainable development policy front.