The relationship between urbanization, technology innovation, trade openness, and CO 2 emissions: evidence from a panel
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RESEARCH ARTICLE
The relationship between urbanization, technology innovation, trade openness, and CO2 emissions: evidence from a panel of Asian countries Azka Amin 1
&
Babar Aziz 2 & Xi-Hua Liu 3
Received: 27 February 2020 / Accepted: 16 June 2020 # Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract This paper explores the dynamic relationship between CO2 emissions, urbanization, trade openness, and technology innovation based on the panel data of 13 Asian countries over the period of 1985–2019. The STIRPAT model is used as a framework for the analysis. For estimation purpose, panel cointegration and FMOLS techniques are utilized. The causality between the concerned variables is also examined by estimating a panel VECM model. The results of panel cointegration reveal the presence of long-run relationship among the variables. FMOLS estimations show that energy consumption increases CO2 emissions while technology change, urbanization, and trade openness compact it. Panel causality analysis indicates bidirectional causality between urbanization and emissions, technology and emissions, trade and emissions, and trade and technology in the long run. Overall findings support the idea that urbanization, technology innovation, and trade openness can play important role to achieve environmental sustainability. Keywords Technology innovation . Trade . Urbanization . CO2 emissions . STIRPAT . Dynamic panel . Asia
Introduction Over the years, the increasing volume of greenhouse gases (GHGs) is a major factor behind environmental degradation worldwide (Seetanah et al. 2018). The global warming and environmental degradation arises as a result of increased energy pollution that adversely affects climate and human health (Adedoyin et al. 2020; Mardani et al. 2019). Being a main source of greenhouse gases, carbon dioxide (CO2) emission has attracted greater attention from researchers over the past two decades. The CO2 emissions contribute to 75% of greenhouse gas emissions (Abbasi and Riaz 2016). Furthermore, CO2 emissions increased to 1.9% during 2018 as compared to 1.2% in 2016 which is quite high (EDGAR 2019). This Responsible editor: Philippe Garrigues * Xi-Hua Liu [email protected] 1
School of Business, Qingdao University, Qingdao 266061, China
2
Department of Economics, Government College University, Lahore, Pakistan
3
School of Economics, Qingdao University, Qingdao 266061, China
sharp rise in global temperature and its impact on the climate prompted the origination of the United Nations Framework Convention on Climate Change in 1992. Later, the “Kyoto Protocol” in 1997 and the “Paris Contract” in 2015 were established with the purpose to alleviate the global warming. Asian countries actively participate in competitions to improve production, but policies to protect the environment failed to mitigate CO2 emissions, as carbon emissions in the Asian region account for 47% of that worldwide (Hanif et al. 2019). Thus, prompt actions are required to mitigate CO2 emission from the major Asian countries
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