Impact of Trade Liberalization
on Environmental Quality:
Evidence from SADC
Countries
Chinyanga Earnest
MEC II
Presentation,
University of Zimbabwe
Outline
•
•
•
•
•
•
•
Introduction and Background
Problem Statement
Research Objectives
Research Questions
Research Hypotheses
Significance and Justification of study
Proposed Methodology
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Introduction/Background
 Global environmental change has become a major public
policy concern for policymakers and scholars (Zamfir, 2014).
 There is an ever-growing inter-face between trade and
environment (Antweiler et al., 2001).
 International trade has been questioned regarding its
environmental impacts, particularly in developing countries.
 With weak environmental policies, free trade may promote growth
that is amenable to pollution-intensive industries that destroy local
environments (Pollution Haven Hypothesis)
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Chinyanga E.R
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Scale, composition, and technique
effects
• Scale effect:
– The scale effect explains the negative environmental
consequences after expansion of economic activity if the nature
of the economic activity remains unchanged.
• Composition effect:
– Changes in the relative size of the economic sectors following a
reduction in trade barriers.
• Technique effect:
– Refers to changes in production methods that follow trade
liberalization. (Grossman and Krueger, 1993).
• The debate has at times generated more heat than light (Antweiler et al.,
2001).
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Cont’d
• Trade openness has been one of the objectives of SADC as
stipulated in the Regional Indicative Strategic Development Plan
(RISDP) (SADC, 2011).
• A Trade Protocol was initiated in the year 2000.
• The economic
heterogeneous.
structures
of
SADC
countries
are
• The region’s emissions represent nearly 2.2% of global
emissions
– no country is responsible for more than 1% of global
emissions (WRI CAIT, 2015).
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• The total GHG emissions of the countries in the
Southern Africa region increased 30% from 1990 to
2011 (WRI CAIT, 2015).
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Problem Statement
• The environment is no other thing than a global public good.
• Rapid economic growth is not an option but a need because of
the starving population (Pindiriri and Chidoko, 2012).
• However, the international community face conflicting interest.
• Trade network implies the transaction of not only goods but also
the environmental responsibility for their production.
• Developing countries tend to prioritise economic growth via
trade policy at the expense of environmental quality
developments.
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Cont’d
• There is an area of contention in the literature.
• The links between trade, environment and climate
change are highly complex.
– The links are far from straight forward; simple universally
valid answers or truths are few.
• It is against this background that this study seeks to
examine the impact of trade liberalization on
environmental quality in SADC developing countries.
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Objectives
• The overall objective of the study is to find out the extent to
which trade liberalization affect environmental quality in
the SADC countries for the period 1990-2016.
• Specific objectives :
• Examine the relationship between trade openness and
greenhouse gases in SADC region.
 Determine the the impact of energy use intensity on CO2
emissions in SADC region.
 Investigate the impact of per capita income on CO2 emissions
in SADC.
 Prove whether the Pollution Haven effect prevails in SADC.
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Research Questions
 What is the relationship between trade openness and
environmental quality in SADC region?
 What is the impact of energy use intensity on CO2
emissions in SADC?
 Does per capita income influence CO2 emissions in
SADC?
 Does the pollution haven effect hold in the case of SADC?
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Research Hypotheses
 Trade liberalization has a significant impact on
environmental quality in SADC.
 Energy use intensity negatively affects environmental
quality in SADC region.
 Per capita income increases CO2 emissions in SADC.
 Pollution Haven effect hold in the case of SADC region.
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Significance and Justification of study
•
Climate change is the biggest sustainable development challenge the international
community has had to tackle to date.
•
It is important to examine whether trade liberalization policies are in fact in conflict
with the environment as they accelerate economic growth.
•
The collection of empirical evidence on the relative impacts of the scale,
composition and technique effects of trade liberalization on the environment is
largely limited to developed countries (Feridun et al, 2006).
•
Many scholars have paid much attention to the volumes of pollutants i.e. emissions
involved or ‘embodied’ in traded goods (Wiebe et al, 2012).
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Cont’
• However, they fail to properly measure the scale,
composition and technique effects of trade on the
environment.
• `
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Methodology and Data
• Data: Panel data for SADC countries (19902016)
• Why Panel ?
– More variability, more degrees of freedom, more
efficiency, more information
– Control for individual heterogeneity (Baltagi, 2008).
CO2it  f (TOPENit , GDPit , GDPit2 , ENGit , POPit ,URBN it , K / Lit , HAVEN it )
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Thank you for listening
Asante sana
Webale nnyo
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References
• Antweiler, W., Copeland, B.R. and Taylor, M.S., 2001. Is Free Trade Good
for the Environment?. American Economic Review, 91(4), pp.877-908.
• Baltagi, B., 2008. Econometric analysis of Panel Data. John Wiley & Sons.
• Feridun, M., Ayadi, F.S. and Balouga, J., 2006. Impact of Trade
Liberalization on the Environment in Developing Countries: the case of
Nigeria. Journal of developing societies, 22(1), pp.39-56.
• Genesis Analytics, 2004. A Survey of the SADC Region: South African
Financial Institutions, Regional Policies and Issues of Access. [Online]
Available: www.genesis-analytics.com. [Accessed 10 October 2018].
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•
Grossman, G.M. and Krueger, A.B., 1995. Economic Growth and the Environment. The
quarterly journal of economics, 110(2), pp.353-377.
•
Pindiriri, C. and Chidoko, C., 2012. “The Impact Assessment of Sustainable Development
Assistance on Carbon Dioxide Emissions: The Sub-Saharan Africa Experience” Journal of
Sustainable Development in AfricaVol. 14, No.2, pp. 182-198.
•
SADC, 2011. Desk Assessment of the Regional Indicative Strategic Development Plan 20052010. [Online] Available: www.sadc.int. [Accessed 10 September 2018].
•
Wiebe, K.S., Bruckner, M., Giljum, S. and Lutz, C., 2012. Calculating Energy-related CO2
Emissions Embodied in International Trade using a Global Input–Output Model. Economic
Systems Research, 24(2), pp.113-139.
•
Zamfir, P.B., 2014. What Is The Impact Of International Trade On Natural Environement. AnnalsEconomy Series, pp.458-462.
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