Trade Openness And Environmental Challenges: The Essential Role Of Government In South Asian Developing Countries

https://doi.org/10.5281/zenodo.19873503

Abstract

Global warming is alarming issue for all over the world. So, it’s necessary to point out this issue to solve the problem of environmental degradation. This paper explains the existence of pollution heaven hypothesis in south Asian developing countries for the period of 1997 to 2022. This study uses the fixed effect model for analysis. The results showed that Trade openness, foreign direct investment, gross domestic product and non-renewable energy consumption are harmful for environment. Renewable energy consumption is environment friendly because there is decrease in carbon emissions due to renewable energy consumption. The results shows that there is existence of pollution heaven hypothesis in south Asian developing countries.  It means that due to trade openness there is increase in carbon emission in south Asian countries. All the variables included in the model are positive and statistically significant except renewable energy consumption. By using interaction term between trade openness and government effectiveness, it is observed that carbon emission is decreased due to government effectiveness. There should be environment friendly technologies and strict rules and regulations in case of trade that’s why we can reduce carbon emissions. The role of government is necessary to protect the environment.