Atmospheric consequences of trade and human development: A case of BRIC countries

Sinha, Avik and Sen, Sudipta (2016): Atmospheric consequences of trade and human development: A case of BRIC countries. Published in: Atmospheric Pollution Research , Vol. 7, No. 6 (2016): pp. 65-87.

Abstract

This paper looks into the causal association between economic growth, CO2 emission, trade volume, and human development indicator for Brazil, Russia, India, and China (BRIC countries) during 1980-2013. Following a generalized method of moments (GMM) technique, we have found out that bidirectional causality exists between CO2 emissions and economic growth. Feedback hypothesis is supported between CO2 emissions and human development, trade volume and human development, economic growth, and human development, and CO2 emissions and trade volume. Apart from finding out the unidirectional association from trade volume to economic growth, this study also validated the existence of Environmental Kuznets curve. Empirical findings of the study substantiate that the policymakers of the BRIC nations must focus on the green energy initiatives, either by in-house development or by technology transfer. This movement will allow them to control the ambient air pollutions prevalent in these nations.

• Item Type: MPRA Paper
• Language: English
• Keywords: economic growth; CO2; trade; human development indicator; BRIC; GMM
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q53 - Air Pollution ; Water Pollution ; Noise ; Hazardous Waste ; Solid Waste ; Recycling

References

Aizenman, J. Noy, I., 2006. FDI and trade – Two-way linkages?. The Quarterly Review of Economics and Finance, 46(3), 317-337.

Ardichvili, A., Zavyalova, E., Minina, V., 2012. Human capital development: comparative analysis of BRICs. European Journal of Training and Development, 36(2/3), 213-233.

Azahaf, N., Schraad-Tischler, D., 2012. Governance Capacities in the BRICS. Bertelsmann Stiftung. Retrieved from http://www.sgi-network.org/brics/?GovernanceCapacities

Barro, R., 1996. Health and economic growth. Cambridge, MA: Harvard University.

Ben-David, D., 1993. Equalizing exchange: Trade liberalization and income convergence. The Quarterly Journal of Economics, 108(3), 653-679.

Bhargava, A., Jamison, D.T., Lau, L.J., Murray, C.J., 2001. Modeling the effects of health on economic growth. Journal of Health Economics, 20(3), 423-440.

Bloom, D.E., Canning, D., Sevilla, J., 2004. The effect of health on economic growth: a production function approach. World Development, 32(1), 1-13.

Bogin, B., Silva, M.I.V., Rios, L., 2007. Life history trade‐offs in human growth: Adaptation or pathology? American Journal of Human Biology, 19(5), 631-642.

Çakır, M.Y., Kabundi, A., 2013. Trade shocks from BRIC to South Africa: A global VAR analysis. Economic Modelling, 32, 190-202.

Caviglia-Harris, J.L., Chambers, D., Kahn, J.R., 2009. Taking the “U” out of Kuznets: A comprehensive analysis of the EKC and environmental degradation. Ecological Economics, 68(4), 1149-1159.

Chakravarty, D., Mandal, S. K., 2016. Estimating the relationship between economic growth and environmental quality for the brics economies-a dynamic panel data approach. The Journal of Developing Areas, 50(5), 119-130.

Cowan, W.N., Chang, T., Inglesi-Lotz, R., Gupta, R., 2014. The nexus of electricity consumption, economic growth and CO2 emissions in the BRICS countries. Energy Policy, 66, 359-368.

Davies, A., Quinlivan, G., 2006. A panel data analysis of the impact of trade on human development. The Journal of Socio-Economics, 35(5), 868-876.

De Castro, T., 2012. Trade cooperation indicators: development of BRIC bilateral trade flows. International Review of Business Research Papers, 8(1), 211-223.

De Grauwe, P., 1988. Exchange rate variability and the slowdown in growth of international trade. Staff Papers-International Monetary Fund, 35(1), 63-84.

Diao, X.D., Zeng, S.X., Tam, C.M., Tam, V.W., 2009. EKC analysis for studying economic growth and environmental quality: a case study in China. Journal of Cleaner Production, 17(5), 541-548.

Dickey, D.A., Jansen, D.W., Fuller, W.A., 1991. A Primer on Cointegration with an Application to Money and Income. Review Federal Reserve Bank of ST. Louis, 73(2), 58-78.

Dollar, D., 1992. Outward-oriented developing economies really do grow more rapidly: evidence from 95 LDCs, 1976-1985. Economic Development and Cultural Change, 40(3), 523-544.

Edwards, S., 1992. Trade orientation, distortions and growth in developing countries. Journal of Development Economics, 39(1), 31-57.

Edwards, S., 1998. Openness, productivity and growth: what do we really know? The Economic Journal, 108(447), 383-398.

Ehrlich, I., Lui, F.T., 1991. Intergenerational trade, longevity, and economic growth. Journal of Political Economy, 99(5), 1029-1059.

Ekins, P., 1997. The Kuznets curve for the environment and economic growth: examining the evidence. Environment and Planning A, 29(5), 805-830.

Frankel, J.A., Rose, A.K., 2005. Is trade good or bad for the environment? Sorting out the causality. Review of Economics and Statistics, 87(1), 85-91.

Galeotti, M., Lanza, A., 1999. Richer and cleaner? A study on carbon dioxide emissions in developing countries. Energy Policy, 27(10), 565-573.

Grossman, G., 2003. Trade and the Environment: Friends or Foes? in Quinlivan, G., Herr, H. (Eds.). Economic Directions. Center for Economic and Policy Education, Alex G. McKenna School of Business, Economics, and Government at Saint Vincent College.

Grossman, G.M., Krueger, A.B., 1991. Environmental impacts of a North American free trade agreement (No. w3914). National Bureau of Economic Research.

Harbaugh, W.T., Levinson, A., Wilson, D.M., 2002. Reexamining the empirical evidence for an environmental Kuznets curve. Review of Economics and Statistics, 84(3), 541-551.

Hill, J., Polasky, S., Nelson, E., Tilman, D., Huo, H., Ludwig, L. ... & Bonta, D., 2009. Climate change and health costs of air emissions from biofuels and gasoline. Proceedings of the National Academy of Sciences, 106(6), 2077-2082.

Im, K.S., Pesaran, M.H., Shin, Y., 2003. Testing for Unit Roots in Heterogeneous Panels. Journal of Econometrics, 115(1), 53-74.

Ivarsson, I., Alvstam, C.G., 2005. Technology transfer from TNCs to local suppliers in developing countries: a study of AB Volvo’s truck and bus plants in Brazil, China, India, and Mexico. World Development, 33(8), 1325-1344.

Jalil, A., Feridun, M., 2011. The impact of growth, energy and financial development on the environment in China: A cointegration analysis. Energy Economics, 33(2), 284-291.

Jayanthakumaran, K., Verma, R., Liu, Y., 2012. CO2 emissions, energy consumption, trade and income: a comparative analysis of China and India. Energy Policy, 42, 450-460.

Lardy, N.R., 1995. The role of foreign trade and investment in China’s economic transformation. The China Quarterly, 144, 1065-1082.

Lash, W.H., 1997. Green Showdown at the WTO. Center for the Study of American Business, Washington University.

Lema, R., Lema, A., 2012. Technology transfer? The rise of China and India in green technology sectors. Innovation and Development, 2(1), 23-44.

Levin, A., Lin, C.F., Chu, C.S., 2002. Unit Root Tests in Panel Data: Asymptotic and Finite Sample Properties. Journal of Econometrics, 108(1), 1-24.

Lucas, R.E., Wheeler, D., Hettige, H., 1993. Economic Development, Environmental Regulation, and the International Migration of Toxic Industrial Pollution, 1960-88 (Vol. 1062). World Bank Publications.

Mahalanobis, P.C., 1955. The approach of operational research to planning in India. Sankhyā: The Indian Journal of Statistics (1933-1960), 16(1/2), 3-130.

Mayer, D., 2001. The long-term impact of health on economic growth in Latin America. World Development, 29(6), 1025-1033.

Mehrara, M., Musai, M., Amiri, H., 2011. Pollution, Energy Consumption and Economic Growth: evidence from India, China and Brazil. Journal of Social and Development Sciences, 2(5), 233-242.

Mercan, M., Gocer, I., Bulut, S., Dam, M., 2013. The effect of openness on Economic growth for BRIC-T countries: Panel data analysis. Eurasian Journal of Business and Economics, 6(11), 1-14.

Messier, M.L., Li, A., Nattie, E.E., 2004. Inhibition of medullary raphe serotonergic neurons has age-dependent effects on the CO2 response in newborn piglets. Journal of Applied Physiology, 96(5), 1909-1919.

Mpoyi, R.T., 2012. The Impact of the “BRIC Thesis” and the Rise of Emerging Economies on Global Competitive Advantage: Will There Be a Shift from West to East? Journal of Applied Business and Economics, 13(3), 36-47.

Munksgaard, J., Pade, L.L., Minx, J., Lenzen, M., 2005. Influence of trade on national CO2 emissions. International Journal of Global Energy Issues, 23(4), 324-336.

Nahman, A., Antrobus, G, 2005. Trade and the environmental Kuznets curve: is Southern Africa a pollution haven? South African Journal of Economics, 73(4), 803-814.

Omri, A., Daly, S., Rault, C., Chaibi, A., 2015. Financial development, environmental quality, trade and economic growth: What causes what in MENA countries. Energy Economics, 48, 242-252.

Ozturk, I., Acaravci, A., 2010. CO2 emissions, energy consumption and economic growth in Turkey. Renewable and Sustainable Energy Reviews, 14(9), 3220-3225.

Pacini, H., Silveira, S., 2013. Carbon Intensities of Economies from the Perspective of Learning Curves. Challenges in Sustainability, 1(2), 94-103.

Palamalai, S., Ravindra, I.S., Prakasam, K., 2014. Relationship between Energy Consumption, CO2 Emissions, Economic Growth and Trade in India. Journal of Economic & Financial Studies, 3(2), 1-17.

Pao, H.T., Tsai, C.M., 2010. CO2 emissions, energy consumption and economic growth in BRIC countries. Energy Policy, 38(12), 7850-7860.

Pao, H.T., Tsai, C.M., 2011a. Multivariate Granger causality between CO2 emissions, energy consumption, FDI (foreign direct investment) and GDP (gross domestic product): evidence from a panel of BRIC (Brazil, Russian Federation, India, and China) countries. Energy, 36(1), 685-693.

Pao, H.T., Tsai, C.M., 2011b. Modeling and forecasting the CO2 emissions, energy consumption, and economic growth in Brazil. Energy, 36(5), 2450-2458.

Pedroni, P., 2004. Panel Cointegration: Asymptotic and Finite Sample Properties of Pooled Time Series Tests with an Application to the PPP Hypothesis: New Results. Econometric Theory, 20(3), 597-627.

Pesaran, M.H., 2007. A simple panel unit root test in the presence of cross‐section dependence. Journal of Applied Econometrics, 22(2), 265-312.

Ranis, G., Stewart, F., Ramirez, A., 2000. Economic growth and human development. World Development, 28(2), 197-219.

Ranis, G., Stewart, F., Samman, E., 2006. Human development: beyond the human development index. Journal of Human Development, 7(3), 323-358.

Ranjan, V., Agrawal, G., 2011. FDI Inflow Determinants in BRIC countries: A Panel Data Analysis. International Business Research, 4(4), 255-263.

Rowlands, D., 2012. Individual BRICS or a collective bloc? Convergence and divergence amongst ‘emerging donor’ nations. Cambridge Review of International Affairs, 25(4), 629-649.

Sachs, J.D., Warner, A., Åslund, A., Fischer, S., 1995. Economic reform and the process of global integration. Brookings Papers on Economic Activity, 1995(1), 1-118.

Schneider, P.H., 2005. International trade, economic growth and intellectual property rights: A panel data study of developed and developing countries. Journal of Development Economics, 78(2), 529-547.

Schrooten, M., 2011. Brazil, Russia, India, China and South Africa: Strong Economic Growth-Major Challenges. DIW Economic Bulletin, 1(4), 18-22.

Sebri, M., Ben-Salha, O., 2014. On the causal dynamics between economic growth, renewable energy consumption, CO2 emissions and trade openness: Fresh evidence from BRICS countries. Renewable and Sustainable Energy Reviews, 39, 14-23.

Shahbaz, M., Khan, S., Tahir, M.I., 2013. The dynamic links between energy consumption, economic growth, financial development and trade in China: fresh evidence from multivariate framework analysis. Energy Economics, 40, 8-21.

Sinha, A., 2014. Carbon Emissions and Mortality Rates: A Causal Analysis for India (1971-2010). International Journal of Economic Practices and Theories. 4(4), 486-492.

Sinha, A., Bhattacharya, J., 2014. Is Economic Liberalization Causing Environmental Degradation in India? An Analysis of Interventions. Journal of Applied Business and Economics. 16(5), 121-136.

Sinha, A., Mehta, A., 2014. Causal analysis of India’s Energy-led growth and CO2 emission (1960-2010). Indian Journal of Economics & Business. 13(1), 81-89.

Sinha, A., 2015. Modeling Energy Efficiency and Economic Growth: Evidences from India. International Journal of Energy Economics and Policy. 5(1), 96-104.

Smith, K.R., 1993. Fuel combustion, air pollution exposure, and health: the situation in developing countries. Annual Review of Energy and the Environment, 18(1), 529-566.

Smith, K.R., Jerrett, M., Anderson, H.R., Burnett, R.T., Stone, V., Derwent, R. ... Thurston, G., 2010. Public health benefits of strategies to reduce greenhouse-gas emissions: health implications of short-lived greenhouse pollutants. The Lancet, 374(9707), 2091-2103.

Srinivasan, T.N., 1994. Human development: a new paradigm or reinvention of the wheel? The American Economic Review, 84(2), 238-243.

Stern, D.I., 2000. A multivariate cointegration analysis of the role of energy in the US macroeconomy. Energy Economics, 22(2), 267-283.

Suri, V., Chapman, D., 1998. Economic growth, trade and energy: implications for the environmental Kuznets curve. Ecological Economics, 25(2), 195-208.

Taft Jr, R.W., 1952. Linear free energy relationships from rates of esterification and hydrolysis of aliphatic and ortho-substituted benzoate esters. Journal of the American Chemical Society, 74(11), 2729-2732.

Tamazian, A., Chousa, J.P., Vadlamannati, K.C., 2009. Does higher economic and financial development lead to environmental degradation: evidence from BRIC countries. Energy Policy, 37(1), 246-253.

The World Bank, 2007. The Little Green Data Book 2007. The World Bank, Washington, DC.

Waligóra, K, 2015. Developed societies=happy societies? Growth or development-BRIC. Journal of International Studies, 8(1), 114-125.

Weil, D.N., 2005. Accounting for the effect of health on economic growth. Quarterly Journal of Economics, 122(3), 1265-1306.

Woodcock, J., Edwards, P., Tonne, C., Armstrong, B.G., Ashiru, O., Banister, D. ... Roberts, I., 2009. Public health benefits of strategies to reduce greenhouse-gas emissions: urban land transport. The Lancet, 374(9705), 1930-1943.

World Bank (2015). World Bank Indicators. Retrieved from http://data.worldbank.org/indicator

Yucel, F., 2009. Causal relationships between financial development, trade openness and economic growth: the case of Turkey. Journal of Social Sciences, 5(1), 33-42.

Zhang, X.P., Cheng, X.M., 2009. Energy consumption, carbon emissions, and economic growth in China. Ecological Economics, 68(10), 2706-2712.