Trade Openness, Political Stability and Environmental Performance: What Kind of Long-Run Relationship?

Jing Niu


Xi’an University of Finance and Economics, Xi’an, Shaanxi (China)

Jun Wen


School of Economics and Finance, Xi’an Jiaotong University, Shaanxi (China)

Xiu-Yun Yang


School of Economics and Finance, Xi’an Jiaotong University, Shaanxi (China)

Chun-Ping Chang

cpchangxj@163.com
Xi’an University of Finance and Economics, Xi’an, Shaanxi (China)


Abstract

This paper investigates the long-run relationships among environmental performance, political stability, and trade openness for 126 countries as well as the sub-samples of OECD and non-OECD countries, using the panel cointegration and panel-based error correction models for the period 2002-2014. For the full sample and the non-OECD countries, our results corroborate that there exists a long-term equilibrium cointegrated relationship among the variables. Moreover, the panel fully modified ordinary least square (FMOLS) estimations present that political stability and trade openness have a negative effect on environmental performance in full samples case as well as the non-OECD countries, whereas trade openness exhibits a positive influence on environmental performance in OECD countries. The vector error correction model (VECM) shows a diversified negative causalities running from trade openness and political stability to environmental performance in the long run for both full samples and the sub-samples countries. The policy implication is that pollution haven hypothesis (PHH) is supported and trade regulations can help promote environmental performance; meanwhile, political stability accelerates macroeconomic performance and attracts more foreign investment. Overall, the government can carry on a policy to lower pollution levels, thus further advancing environmental performance.


Keywords:

political stability, trade openness, Environmental Performance Index, Panel Cointegration, causality

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Published
2018-07-02

Cited by

Niu, J., Wen, J., Yang, X.-Y., & Chang, C.-P. (2018). Trade Openness, Political Stability and Environmental Performance: What Kind of Long-Run Relationship?. Problemy Ekorozwoju, 13(2), 57–66. Retrieved from https://ph.pollub.pl/index.php/preko/article/view/5013

Authors

Jing Niu 

Xi’an University of Finance and Economics, Xi’an, Shaanxi China

Authors

Jun Wen 

School of Economics and Finance, Xi’an Jiaotong University, Shaanxi China

Authors

Xiu-Yun Yang 

School of Economics and Finance, Xi’an Jiaotong University, Shaanxi China

Authors

Chun-Ping Chang 
cpchangxj@163.com
Xi’an University of Finance and Economics, Xi’an, Shaanxi China

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