Impact of economic openness and innovations on the environment: A new look into asean countries

Abstract

This study aims to investigate the effects of economic openness and innovations on the environment of ASEAN countries for 1990-2014. We have employed several techniques for empirical analysis. To examine cross-sectional dependence and unit root test, we have used the Pesaran CD test and Pesaran CIPS unit root test. Pedroni and Kao and Westurland cointegration tests have been employed to confirm the cointegration among the variables. For estimations of long-run relationship, we have utilized DOLS and FMOLS techniques. Moreover, to determine the causality directions, we have employed Dumitrescu-Hurlin causality test. The results of the study show that energy use and trade openness significantly increase CO2 emissions in ASEAN countries. On the other hand, FDI, GDP and patents markedly depress CO2 emissions. The findings depict that energy use and trade openness harm the environment by escalating CO2 emissions while FDI, GDP and patents improve the environment by depressing CO2 emissions. Therefore, policy-makers should encourage investment in renewable energy sources and boost green trade openness in ASEAN countries.