Impacts Of Economic Openness On CO₂ Emissions:Evidence From OBOR Countries

To investigate the impacts of economic openness on CO₂ emissions is the main aim of this study.Trade liberalization,foreign direct investment,electricity consumption,economic growth,financial development and energy efficiency are considered to evaluate the impacts in One Belt One Road?OBOR?countries.Openness brings economic growth as well as environmental pollution,a little is known negative effects of openness has been proportionally offset by providing good governance to enhance infrastructure's competitiveness in globalized environment.Establishing long?term relationship among countries for environmental infrastructure has become indispensable.This research improves the understanding of these trade?offs by conducting empirical analysis with special attention to OBOR countries.This study has important theoretical and practical significance for the construction of the green OBOR.There is an absence of econometric studies that investigate the impacts of economic openness on CO₂ emissions in different regions ranging from 1990 to 2017 and auto regressive lag distribution?ARDL?method and generalized method of moment?GMM?were used in this research.This study also distributed its research according to regions like Central&Eastern Europe?CEE?,Middle East&Africa?MEA?,South Asia?SA?,South East Asia?SEA?and Central&Western Asia?CWA?.The results show that FDI is still not reached at that stage where FDI significantly contributes to lowering the emissions in long run.Moreover,electricity consumption in long and short run also harms the environment in form of emitting CO₂ emissions.Hence in short run FDI minimized the CO₂ emissions.While,energy efficiency in OBOR countries tends to minimize the CO₂ emissions in long and short run.Financial development increased CO₂emissions in long run but it has negative correlation in short run.Trade liberalization in OBOR countries minimizes CO₂ emissions in long run but increased CO₂ emissions in short run.This research also elaborated that economic openness has positive correlation with environmental infrastructure as openness increases infrastructure of the country also enhanced.As this study suggested that FDI increased CO₂ emissions in long run but together with good governance FDI decreased the CO₂ emissions.Granger Causality test was conducted to confirm the causality between variables under discussion.In these situations,policymakers should find the ways to improve the economy with efficient resources so that CO₂ emissions will be lower.Initially,it is important to note that attracting FDI strengthen the continuous upgrading of the industrial sector and change the structure of an economy,which can be helpful to minimize the energy consumption and improve the environmental quality.This leads to the awareness that to measure environmental conditions of polluted areas,there is a need to formulate better governance.To enhance host country growth as well as to maximize the stability of environmental infrastructure,authorities should construct policy on attracting transnational cluster.It is implied by our results that cost of economic growth and CO₂ emissions can be reduced by enhancement of energy efficiency and with the help of improvement of financial sectors which import environment-friendly technologies from developed countries which may lesser harm the environment.Both countries have to invest in green energy to get benefits from FDI and trade in long as well as short run.As a result,this green energy will attract more investments from abroad.The findings recommend that inclusion of openness in domestic industries not only improve the energy efficiency and environmental sustainability but also enhance the environment conservation in the economies.