Environmental Science and Pollution Research

, Volume 26, Issue 5, pp 5221–5233 | Cite as

Tracing the trade–pollution nexus in global value chains: evidence from air pollution indicators

  • Rizwana Yasmeen
  • Yunong Li
  • Muhammad HafeezEmail author
Research Article


Global trade plays an imperative role in the world economy that yields environmental degradation. Therefore, the current paper’s ambitions are to explore the trade–air pollution nexuses by introducing the value-added trade (VT) concept from a global value chain stance. The value-added trade (VT) indicator is constructed by the World Input-Output (WIOD) classifications database. Owing to scanty data accessibility, the sample set is reduced to 39 countries covering the period from 1995 to 2009. Furthermore, this paper is also contributing by including the eight different pathways of per capita air pollution in terms of ammonia (NH3), carbon monoxide (CO), carbon dioxide (CO2), methane (CH4), nitrogen oxides (NOx), nitrous oxide (N2O), sulphur oxides (SOx) and non-methane volatile organic compounds (NMVOC) respectively. The valuable outcomes from empirical analysis have been found; Firstly, it explores that the preliminary stage of the development of value-added trade (VT) has a positive impact on air-bonds pollution. However, in the later stage of the economic development, trade improves the environmental quality as the square of value-added trade (VT2) has a negative impact on air pollution. Moreover, it also elaborates that the magnitude impact of trade on carbon monoxide (CO) air pollution is more than the other seven air pollutants. Thirdly, the inverted U-shape in the trade–air pollution Environmental Kuznets Curve (EKC) hypothesis, the non-linear relationship between trade and pollution is also validated in all eight air pollutants indicators. Policy proposals for green economy that underlines the global value chain stance and environmental factors in the growing economy are proposed.


Trade–Air pollution nexus Value-added trade Air pollution indicators World Input-Output classifications and Environmental Kuznets Curve hypothesis 



The authors are grateful to the Editor, Dr. Philippe Garrigues, as well as to anonymous referees, for the valuable suggestions and encouraging comments coming from the reviewing process, which helped us to enhance the quality of our paper substantially.


  1. Ahmed K, Shahbaz M, Kyophilavong P (2016) Revisiting the emissions-energy-trade nexus: evidence from the newly industrializing countries. Environ Sci Pollut Res 23(8):7676–7691Google Scholar
  2. Aichele R, Heiland I (2016) Where is the value added? Trade liberalization and production networks. CESifo Working Paper, No. 6026, Center for Economic Studies and Ifo Institute (CESifo), MunichGoogle Scholar
  3. Amable B (2000) International specialisation and growth. Struct Chang Econ Dyn 11(4):413–431Google Scholar
  4. Antweiler W, Copeland BR, Taylor MS (2001) Is free trade good for the environment? Am Econ Rev 91(4):877–908Google Scholar
  5. Arellano M, Bond S (1991) Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Rev Econ Stud 58(2):277–297Google Scholar
  6. Arouri MEH, Youssef AB, M'henni H, Rault C (2012) Energy consumption, economic growth and CO2 emissions in Middle East and North African countries. Energy Policy 45:342–349Google Scholar
  7. Barrows G, Ollivier H (2014) Does trade make firms cleaner? theory and evidence from indian manufacturing. Unpublished manuscript, UC BerkeleyGoogle Scholar
  8. Bekhet HA, Othman NS (2017) Impact of urbanization growth on Malaysia CO 2 emissions: evidence from the dynamic relationship. J Clean Prod 154:374–388Google Scholar
  9. Bernard J, Mandal SK (2016) The impact of trade openness on environmental quality: an empirical analysis of emerging and developing economies. WIT Trans Ecol Environ 203:195–208Google Scholar
  10. Bombardini M, Li B (2016) Trade, pollution and mortality in china (No. w22804). National Bureau of Economic ResearchGoogle Scholar
  11. Brakman S, Van Marrewijk C (2017) A closer look at revealed comparative advantage: gross-versus value-added trade flows. Pap Reg Sci 96(1):61–92Google Scholar
  12. Capolupo R, Celi G (2008) Openness and economic growth: a comparative study of alternative trading regimes. Économie internationale 4:5–35Google Scholar
  13. Chebbi HE, Olarreaga M, Zitouna H (2011) Trade openness and CO 2 emissions in Tunisia. MEDJ 3(01):29–53Google Scholar
  14. De Sousa J, Hering L, Poncet S (2015) Has trade openness reduced pollution in China? Working Papers 2015-11, CEPII Research CenterGoogle Scholar
  15. Dean JM, Lovely ME (2010) Trade growth, production fragmentation, and China’s environment. In China’s growing role in world trade. National Bureau of Economic Research, Inc., USA., pp 429-469Google Scholar
  16. Dinda S (2004) Environmental Kuznets curve hypothesis: a survey. Ecol Econ 49(4):431–455Google Scholar
  17. Dinda S, Coondoo D (2006) Income and emission: a panel data-based cointegration analysis. Ecol Econ 57(2):167–181Google Scholar
  18. Engle R, Granger C (1987) Co-integration and error correction: representation, estimation, and testing. Econometrica 55(2):251–276.
  19. Farhani S, Ozturk I (2015) Causal relationship between CO 2 emissions, real GDP, energy consumption, financial development, trade openness, and urbanization in Tunisia. Environ Sci Pollut Res 22(20):15,663–15,676Google Scholar
  20. Fernández-Amador O, Francois JF, Tomberger P (2016) Carbon dioxide emissions and international trade at the turn of the millennium. Ecol Econ 125:14–26Google Scholar
  21. Frankel JA, Rose AK (2005) Is trade good or bad for the environment? Sorting out the causality. Rev Econ Stat 87(1):85–91Google Scholar
  22. Gozgor G (2017) Does trade matter for carbon emissions in OECD countries? Evidence from a new trade openness measure. Environ Sci Pollut Res 24(36):27813–27821Google Scholar
  23. Grossman GM, Krueger AB (1991) Environmental impacts of a North American free trade agreement. NBERWorking Paper No. 3914.
  24. Hafeez M, Chunhui Y, Strohmaier D, Ahmed M, Jie L (2018) Does finance affect environmental degradation: evidence from One Belt and One Road Initiative region? Environ Sci Pollut Res 25:1–14. Google Scholar
  25. Halkos GE (2003) Environmental Kuznets Curve for sulfur: evidence using GMM estimation and random coefficient panel data models. Environ Dev Econ 8(4):581–601Google Scholar
  26. Hasson A, Masih M (2017) Energy consumption, trade openness, economic growth, carbon dioxide emissions and electricity consumption: evidence from South Africa based on ARDL. MPRA Paper 79424, University Library of Munich, GermanyGoogle Scholar
  27. Ibrahim MH, Law SH (2016) Institutional Quality and CO2 Emission–Trade Relations: Evidence from Sub-Saharan Africa. S Afr J Econ 84(2):323–340Google Scholar
  28. Imori D, Guilhoto J (2015) Tracing Brazilian regions? CO2 emissions in domestic and global trade. Working Papers, Department of Economics 2015_33, University of São Paulo (FEA-USP), São PauloGoogle Scholar
  29. Jaunky VC (2011) The CO2 emissions-income nexus: evidence from rich countries. Energy Policy 39(3):1228–1240Google Scholar
  30. Jebli MB, Youssef SB, Ozturk I (2016) Testing environmental Kuznets curve hypothesis: the role of renewable and non-renewable energy consumption and trade in OECD countries. Ecol Indic 60:824–831Google Scholar
  31. Kao C (1999) Spurious regression and residual-based tests for cointegration in panel data. J Econ 90(1):1–44Google Scholar
  32. Kasman A, Duman YS (2015) CO2 emissions, economic growth, energy consumption, trade and urbanization in new EU member and candidate countries: a panel data analysis. Econ Model 44:97–103Google Scholar
  33. KEHO Y (2016) Trade openness and the environment: a time series study of ECOWAS countries. J Econ 4(4):61–69Google Scholar
  34. Kohler M (2013) CO2 emissions, energy consumption, income and foreign trade: a South African perspective. Energy Policy 63:1042–1050Google Scholar
  35. Lau LS, Choong CK, Eng YK (2014) Investigation of the environmental Kuznets curve for carbon emissions in Malaysia: do foreign direct investment and trade matter? Energy Policy 68:490–497Google Scholar
  36. Leontief WW (1936) Quantitative input and output relations in the economic systems of the United States. Rev Econ Stat 18:105–125.
  37. Lin J, Pan D, Davis SJ, Zhang Q, He K, Wang C et al (2014) China’s international trade and air pollution in the United States. Proc Natl Acad Sci 111(5):1736–1741Google Scholar
  38. Ling CH, Ahmed K, Muhamad RB, Shahbaz M (2015) Decomposing the trade-environment nexus for Malaysia: what do the technique, scale, composition, and comparative advantage effect indicate? Environ Sci Pollut Res 22(24):20131–20142Google Scholar
  39. Liu J, Yuan C, Hafeez M, Yuan Q (2018) The relationship between environment and logistics performance: evidence from Asian countries. J Clean Prod 204:282–291Google Scholar
  40. Managi S, Hibiki A, Tsurumi T (2008) Does trade liberalization reduce pollution emissions. Discussion papers, Research Institute of Economy, Trade and Industry (RIETI), TokyoGoogle Scholar
  41. Meng B, Peters GP, Wang Z, Li M (2018) Tracing CO2 emissions in global value chains. Energy Econ 73:24–42Google Scholar
  42. Naranpanawa A (2011) Does trade openness promote carbon emissions? Empirical evidence from Sri Lanka. EEL 10(10):973–986Google Scholar
  43. Narayan PK, Narayan S (2010) Carbon dioxide emissions and economic growth: panel data evidence from developing countries. Energy Policy 38(1):661–666Google Scholar
  44. Nasir M, Rehman FU (2011) Environmental Kuznets curve for carbon emissions in Pakistan: an empirical investigation. Energy Policy 39(3):1857–1864Google Scholar
  45. Noguera G (2012) Trade costs and gravity for gross and value added trade. Job Market Paper, Columbia University, New YorkGoogle Scholar
  46. Ozturk I, Acaravci A (2013) The long-run and causal analysis of energy, growth, openness and financial development on carbon emissions in Turkey. Energy Econ 36:262–267Google Scholar
  47. Panayotou T (1993) Empirical tests and policy analysis of environmental degradation at different stages of economic development. Working Paper, Technology and Employment Programme, International Labor Office, GenevaGoogle Scholar
  48. Patrick DL, Murray TP, Sullivan RK, Kimmell KL (2015) Health & environmental effects of air pollution.
  49. Pedroni P (1999) Critical values for cointegration tests in heterogeneous panels with multiple regressors. Oxf Bull Econ Stat 61(S1):653–670Google Scholar
  50. Pedroni P (2004) Panel cointegration: asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Econometric theory 20(3):597–625Google Scholar
  51. Pedroni P (2001) Purchasing power parity tests in cointegrated panels, no 2001-01, Department of Economics Working Papers, Department of Economics, Williams CollegeGoogle Scholar
  52. Pedroni P (2007) Social capital, barriers to production and capital shares: implications for the importance of parameter heterogeneity from a nonstationary panel approach. J Appl Econ 22(2):429–451Google Scholar
  53. Rauf A, Liu X, Amin W, Ozturk I, Rehman OU, Hafeez M (2018) Testing EKC hypothesis with energy and sustainable development challenges: A fresh evidence from Belt and Road Initiative economies. Environ Sci Pollut Res 25:1–15. Google Scholar
  54. Romero-Ávila D (2008) Questioning the empirical basis of the environmental Kuznets curve for CO2: New evidence from a panel stationarity test robust to multiple breaks and cross-dependence. Ecol Econ 64(3):559–574Google Scholar
  55. Sbia R, Shahbaz M, Hamdi H (2014) A contribution of foreign direct investment, clean energy, trade openness, carbon emissions and economic growth to energy demand in UAE. Econ Model 36:191–197Google Scholar
  56. Selden TM, Song D (1994) Environmental quality and development: is there a Kuznets curve for air pollution emissions? J Environ Econ Manag 27(2):147–162Google Scholar
  57. Shahbaz M, Khraief N, Uddin GS, Ozturk I (2014) Environmental Kuznets curve in an open economy: A bounds testing and causality analysis for Tunisia. Renew Sust Energ Rev 34:325–336Google Scholar
  58. WIOD (2013) World Input-Output Database. Available at Accessed 13 Aug 2018
  59. Xu F, Milner C (2008) The Pollution Content in China’s Trade. Research paper series China and World Economy, Working Paper 2009/19, University of Nottingham, UK
  60. Yang J, Wang Y (2016) FDI and environmental pollution nexus in China. NEKP01 20161.
  61. Yasmeen R, Li Y, Hafeez M, Ahmad H (2018) The trade-environment nexus in light of governance: a global potential. Environ Sci Pollut Res 25:1–20. Google Scholar
  62. Zhang S, Liu X, Bae J (2017) Does trade openness affect CO2 emissions: evidence from ten newly industrialized countries? Environ Sci Pollut Res 24(21):17616–17625Google Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Southwestern University of Finance and EconomicsChengduChina
  2. 2.Sichuan Institute for Free Trade Zone ResearchSWUFEChengduChina
  3. 3.School of Economics and ManagementBeijing University of Posts and TelecommunicationsBeijingChina
  4. 4.The Center of Industrial Economics and Green DevelopmentBUPTBeijingChina

Personalised recommendations