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Decomposing the trade-environment nexus for Malaysia: what do the technique, scale, composition, and comparative advantage effect indicate?

This paper investigates the impact of trade openness on CO2 emissions using time series data over the period of 1970QI-2011QIV for Malaysia. We disintegrate the trade effect into scale, technique, composition, and comparative advantage effects to check the environmental consequence of trade at four...

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Main Authors: Ling, C.H., Ahmed, K., Muhamad, R., Shahbaz, M.
Format: Article
Published: 2015
Subjects:
Q Science (General)
Online Access:http://eprints.um.edu.my/16461/
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spelling my.um.eprints.164612016-09-15T02:19:53Z http://eprints.um.edu.my/16461/ Decomposing the trade-environment nexus for Malaysia: what do the technique, scale, composition, and comparative advantage effect indicate? Ling, C.H. Ahmed, K. Muhamad, R. Shahbaz, M. Q Science (General) This paper investigates the impact of trade openness on CO2 emissions using time series data over the period of 1970QI-2011QIV for Malaysia. We disintegrate the trade effect into scale, technique, composition, and comparative advantage effects to check the environmental consequence of trade at four different transition points. To achieve the purpose, we have employed augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) unit root tests in order to examine the stationary properties of the variables. Later, the long-run association among the variables is examined by applying autoregressive distributed lag (ARDL) bounds testing approach to cointegration. Our results confirm the presence of cointegration. Further, we find that scale effect has positive and technique effect has negative impact on CO2 emissions after threshold income level and form inverted U-shaped relationship-hence validates the environmental Kuznets curve hypothesis. Energy consumption adds in CO2 emissions. Trade openness and composite effect improve environmental quality by lowering CO2 emissions. The comparative advantage effect increases CO2 emissions and impairs environmental quality. The results provide the innovative approach to see the impact of trade openness in four sub-dimensions of trade liberalization. Hence, this study attributes more comprehensive policy tool for trade economists to better design environmentally sustainable trade rules and agreements. 2015 Article PeerReviewed Ling, C.H. and Ahmed, K. and Muhamad, R. and Shahbaz, M. (2015) Decomposing the trade-environment nexus for Malaysia: what do the technique, scale, composition, and comparative advantage effect indicate? Environmental Science and Pollution Research, 22 (24). pp. 20131-20142. ISSN 0944-1344 DOI: 10.1007/s11356-015-5217-9
institution Universiti Malaya
building UM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Malaya
content_source UM Research Repository
url_provider http://eprints.um.edu.my/
topic Q Science (General)
spellingShingle Q Science (General)
Ling, C.H.
Ahmed, K.
Muhamad, R.
Shahbaz, M.
Decomposing the trade-environment nexus for Malaysia: what do the technique, scale, composition, and comparative advantage effect indicate?
description This paper investigates the impact of trade openness on CO2 emissions using time series data over the period of 1970QI-2011QIV for Malaysia. We disintegrate the trade effect into scale, technique, composition, and comparative advantage effects to check the environmental consequence of trade at four different transition points. To achieve the purpose, we have employed augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) unit root tests in order to examine the stationary properties of the variables. Later, the long-run association among the variables is examined by applying autoregressive distributed lag (ARDL) bounds testing approach to cointegration. Our results confirm the presence of cointegration. Further, we find that scale effect has positive and technique effect has negative impact on CO2 emissions after threshold income level and form inverted U-shaped relationship-hence validates the environmental Kuznets curve hypothesis. Energy consumption adds in CO2 emissions. Trade openness and composite effect improve environmental quality by lowering CO2 emissions. The comparative advantage effect increases CO2 emissions and impairs environmental quality. The results provide the innovative approach to see the impact of trade openness in four sub-dimensions of trade liberalization. Hence, this study attributes more comprehensive policy tool for trade economists to better design environmentally sustainable trade rules and agreements.
format Article
author Ling, C.H.
Ahmed, K.
Muhamad, R.
Shahbaz, M.
author_facet Ling, C.H.
Ahmed, K.
Muhamad, R.
Shahbaz, M.
author_sort Ling, C.H.
title Decomposing the trade-environment nexus for Malaysia: what do the technique, scale, composition, and comparative advantage effect indicate?
title_short Decomposing the trade-environment nexus for Malaysia: what do the technique, scale, composition, and comparative advantage effect indicate?
title_full Decomposing the trade-environment nexus for Malaysia: what do the technique, scale, composition, and comparative advantage effect indicate?
title_fullStr Decomposing the trade-environment nexus for Malaysia: what do the technique, scale, composition, and comparative advantage effect indicate?
title_full_unstemmed Decomposing the trade-environment nexus for Malaysia: what do the technique, scale, composition, and comparative advantage effect indicate?
title_sort decomposing the trade-environment nexus for malaysia: what do the technique, scale, composition, and comparative advantage effect indicate?
publishDate 2015
url http://eprints.um.edu.my/16461/
_version_ 1643690281515614208
score 13.211869

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