The Impact of Trade Openness on Carbon Dioxide Emissions In USA, China and Egypt

Abstract

Climate Change is one of the most important issues facing our planet, the concerns are growing under the global trading system. trade benefits may generate considerable pressure on the environment because of more trade and economic activity would lead to an  increase in energy consumption. Carbon dioxide is the main source of greenhouse effect and captures great attention in the recent years, are most of the  emissions comes from fossil fuels consumption.

Recently, China has shown significant growth in emissions, accounting for 28% of global emissions in 2013. It also became the world’s first exporter of industrial products, and the world’s biggest emitter of  emissions, while  the  emissions of USA decreased  from 5702 (Million tonnes) in 2005 to 5119 (Mt) in 2013. That leads to raise the questionif  the USA emissions have been decreased as a result of implementions the commitments under the Kyoto Protocol, or as a result of transfering  carbon-intensive activities to developing countries, and  conversion to import rather than export these products.

This paper is trying  to measure the impact of trade openness, economic development, foreign direct investment, energy consumption and urbanization on environment, using Time -Series data over the period 1982-2013  in  the United States, China and Egypt. The Engle -Granger Two-Step Model is used to test the long-runand short-run relationships between the variables by applying the Error-Correction Model (ECM). The results showed that the main reason for reducing carbon dioxide emissions in the United States is net trade,while in China and Egypt  are a pollution haven of direty products as net trade and foreign direct investment lead to increase emissions. In addition, The results support environmental Kuznets curve (EKC) hypothesis.