title: Decomposing the trade-environment nexus for Malaysia: what do the technique, scale, composition, and comparative advantage effect indicate?
abstract: 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.
authors: Institute of Postgraduate Studies, University of Malaya, Kuala Lumpur, Malaysia. felicia.chonghl@gmail.com.
authors: Chong Hui
authors: CH
authors: Ling
authors: Institute of Business Administration, Sukkur, Pakistan. khalid.ahmed@iba-suk.edu.pk.
authors: Khalid
authors: http://orcid.org/0000-0001-7162-1427
authors: K
authors: Ahmed
authors: Faculty of Business and Accountancy, University of Malaya, Kuala Lumpur, Malaysia. rusnah@um.edu.my.
authors: Rusnah
authors: R
authors: Binti Muhamad
authors: Department of Management Sciences, COMSATS Institute of Information Technology, Lahore, Pakistan. shahbazmohd@live.com.
authors: Muhammad
authors: M
authors: Shahbaz
mesh_terms: D000393:Air Pollutants / Q000032:analysis*; D002245:Carbon Dioxide / Q000032:analysis*; D003906:Developing Countries; D004777:Environment; D006801:Humans; D007391:International Cooperation; D008296:Malaysia
chemical_list: D000393:Air Pollutants; D002245:Carbon Dioxide
keywords: CO2 emissions; Composition effect; Economic growth; Environmental Kuznets curve; Scale effect; Technique effect; Trade openness