Can Trade Openness Foster a Greener Future? Evidence from APEC Economies on Macroeconomic Drivers of Environmental Sustainability

Abstract

This study investigates the dynamic effects of trade openness, income level, renewable energy consumption, and R&D expenditure on environmental degradation in 16 selected Asia-Pacific Economic Cooperation (APEC) member countries over the period 1990–2023. Using total greenhouse gas emissions (GHG) per capita as a comprehensive measure of environmental degradation, the analysis incorporates FDI, industrialization, and urbanization as control variables to account for broader macroeconomic and structural influences. This study employs a robust econometric framework including Prais–Winsten regression, Panel-Corrected Standard Errors (PCSE), Random Effects Generalized Least Squares (RE-GLS), and Robust Least Squares (RLS) estimation models. The empirical results reveal that trade openness has a mitigating effect on greenhouse gas emissions, suggesting that increased trade may promote cleaner technologies and encourage more environmentally friendly production processes within APEC economies. In contrast, income level and industrialization are found to significantly lead to environmental degradation, while renewable energy consumption exhibits a consistent and significant negative relationship with GHG emissions. R&D expenditure highlights the role of innovation in reducing emissions in the RLS estimation, but its effect remains model-dependent. Moreover, Granger causality results conclude the bidirectional relationships between most variables and environmental degradation. These results underscore the importance of integrated policies that promote renewable energy, green industrial strategies, and sustainable trade practices. This study offers empirical insights into environmental governance in the APEC region and contributes to the evolving discourse on balancing economic development with ecological sustainability.

Keywords

• Trade Openness
• Environmental Sustainability
• Greenhouse Gas Emissions
• Renewable Energy Consumption
• APEC Economies

Ticaret Açıklığı Daha Yeşil Bir Geleceği Teşvik Edebilir mi? APEC Ekonomilerinden Çevresel Sürdürülebilirliğin Makroekonomik Belirleyicilerine Dair Kanıtlar

Öz

Bu çalışma, 1990–2023 dönemi için seçilmiş 16 Asya-Pasifik Ekonomik İşbirliği (APEC) üyesi ülkede ticari açıklık, gelir düzeyi, yenilenebilir enerji tüketimi ve AR-GE harcamalarının çevresel bozulma üzerindeki dinamik etkilerini incelemektedir. Çevresel bozulmanın kapsamlı bir göstergesi olarak kişi başına toplam sera gazı (GHG) emisyonları kullanılmış, ayrıca daha geniş makroekonomik ve yapısal etkileri dikkate almak amacıyla doğrudan yabancı yatırım (DYY), sanayileşme ve kentleşme kontrol değişkenleri olarak analize dâhil edilmiştir. Çalışmada Prais–Winsten regresyonu, Panel-Corrected Standard Errors (PCSE), Random Effects Generalized Least Squares (RE-GLS) ve Robust Least Squares (RLS) tahmin yöntemlerini içeren güçlü bir ekonometrik çerçeve kullanılmıştır. Ampirik bulgular, ticari açıklığın sera gazı emisyonlarını azaltıcı bir etkisi olduğunu ortaya koymakta; bu da artan ticaretin daha temiz teknolojileri teşvik edebileceğini ve APEC ekonomilerinde daha çevre dostu üretim süreçlerini destekleyebileceğini düşündürmektedir. Buna karşılık, gelir düzeyi ve sanayileşmenin çevresel bozulmayı önemli ölçüde artırdığı, yenilenebilir enerji tüketiminin ise GHG emisyonlarıyla tutarlı ve anlamlı bir şekilde negatif ilişki gösterdiği bulunmuştur. Ar-Ge harcamaları, RLS tahmininde emisyonların azaltılmasında yeniliğin rolünü vurgulasa da etkisinin modele bağlı olduğu görülmektedir. Ayrıca Granger nedensellik testleri, çoğu değişken ile çevresel bozulma arasında çift yönlü ilişkiler bulunduğunu ortaya koymaktadır. Bu sonuçlar, yenilenebilir enerjiyi, yeşil sanayi stratejilerini ve sürdürülebilir ticaret uygulamalarını teşvik eden bütüncül politikaların önemini vurgulamaktadır. Çalışma, APEC bölgesinde çevresel yönetişim konusunda ampirik bulgular sunmakta ve ekonomik kalkınma ile ekolojik sürdürülebilirliğin dengelenmesine yönelik gelişen tartışmalara katkıda bulunmaktadır.

Anahtar Kelimeler

• Ticaret Açıklığı
• Çevresel Sürdürülebilirlik
• Sera Gazı Emisyonları
• Yenilenebilir Enerji Tüketimi
• APEC Ekonomileri

References

1. Ahmed, F., Ali, I., Kousar, S., & Ahmed, S. (2022). The environmental impact of industrialization and foreign direct investment in the Asia-Pacific region. Environmental Science and Pollution Research. https://doi.org/10.1007/s11356-021-17560-w
2. Almeida, D., Carvalho, L., Ferreira, P., Dionísio, A., & Haq, I. U. (2024). Global dynamics of environmental kuznets curve: A cross-correlation analysis of income and co2 emissions. Sustainability, 16(20), 9089. https://doi.org/10.3390/su16209089
3. Al-mulali, U., Ozturk, I., & Lean, H. H. (2015). The influence of economic growth, urbanization, trade openness, financial development, and renewable energy on pollution in Europe. Natural Hazards, 79(1), 621–644. https://doi.org/10.1007/s11069-015-1865-9
4. Almulhim, A. A., Inuwa, N., Chaouachi, M., & Samour, A. (2025). Testing the impact of renewable energy and institutional quality on consumption-based co2 emissions: Fresh insights from MMQR approach. Sustainability (Switzerland), 17(2). https://doi.org/10.3390/su17020704
5. Amoah, J. O., Alagidede, I. P., & Sare, Y. A. (2024). Industrialization and carbon emission nexus in Sub-Saharan Africa. The moderating role of trade openness. Cogent Economics and Finance, 12(1). https://doi.org/10.1080/23322039.2024.2360803
6. Antweiler, W., Copeland, B. R., & Taylor, M. S. (2001). Is free trade good for the environment?. American Economic Review, 91(4), 877–908. https://doi.org/10.1257/aer.91.4.877
7. Audi, M., Poulin, M., Ahmad, K., & Ali, A. (2025). Modeling disaggregate globalization to carbon emissions in BRICS: A panel quantile regression analysis. Sustainability (Switzerland), 17(6). https://doi.org/10.3390/su17062638
8. Bakri, M. A., Chia, Y.-E., & Chia, R. C.-J. (2025). Trade openness and carbon emissions using threshold approach: Evidence from selected Asian countries. Environmental Science and Pollution Research. https://doi.org/10.1007/s44246-025-00211-x

9. Balli, E. (2024). The effects of financial development, trade and energy consumption on CO₂ emissions in APEC countries. International Journal of Sustainable Energy. https://doi.org/10.1080/15567249.2024.2372627
10. Cole, M. A. (2004). Trade, the pollution haven hypothesis and the environmental Kuznets curve: Examining the linkages. Ecological Economics, 48(1), 71–81. https://doi.org/10.1016/j.ecolecon.2003.09.007
11. Copeland, B. R., & Taylor, M. S. (2003). Trade and the environment: Theory and evidence. Princeton University Press.
12. Dam, M. M., Kaya, F., & Bekun, F. V. (2024). How does technological innovation affect the ecological footprint? Evidence from E-7 countries in the background of the SDGs. Journal of Cleaner Production, 443. https://doi.org/10.1016/j.jclepro.2024.141020
13. Dash, D. P., & Dash, A. K. (2022). Oil consumption–pollution dynamics in the Asia-Pacific region: The importance of institutional factors. Energy Research Letters, 3(1). https://doi.org/10.46557/001c.30058
14. Dharmapriya, N., Gunawardena, V., Methmini, D., Jayathilaka, R., & Rathnayake, N. (2025). Carbon emissions across income groups: Exploring the role of trade, energy use, and economic growth. Discover Sustainability, 6(1). https://doi.org/10.1007/s43621-025-01261-2
15. Dogan, E., & Inglesi-Lotz, R. (2020). The impact of economic structure to the environmental degradation: Renewable vs non-renewable energy uses in G20 countries. Renewable Energy, 156, 1020–1033. https://doi.org/10.1016/j.renene.2020.04.103
16. Dogan, E., & Seker, F. (2016). The influence of real output, renewable and non-renewable energy, trade, and financial development on carbon emissions in the top renewable energy countries. Renewable and Sustainable Energy Reviews, 60, 1074–1085. https://doi.org/10.1016/j.rser.2016.02.006
17. Ferhi, A., & Helali, K. (2024). The impact of renewable energy on the environment and socio-economic welfare: Empirical evidence from OECD countries. Journal of the Knowledge Economy, 15(1), 4776–4799. https://doi.org/10.1007/s13132-023-01320-x
18. Furtuna, O. K., & Atis, S. (2024). Does foreign direct investment affect environmental degradation: Evidence from largest carbon intense countries. PLoS ONE, 19(11). https://doi.org/10.1371/journal.pone.0314232
19. Grossman, G. M., & Krueger, A. B. (1995). Economic growth and the environment. The Quarterly Journal of Economics, 110(2), 353–377. https://doi.org/10.2307/2118443
20. Han, A., Konat, G., & Polat, M. A. (2024). Investigation of pollution haven hypothesis for China: A Fourier ADL cointegration analysis. Akademik Araştırmalar ve Çalışmalar Dergisi (AKAD), 16(31), 429–440. https://doi.org/10.20990/kilisiibfakademik.1512603
21. Hasnisah, A., Azlina, A. A., & Taib, C. M. I. C. (2019). The impact of renewable energy consumption on carbon dioxide emissions: Empirical evidence from developing countries in Asia. International Journal of Energy Economics and Policy, 9(3), 135–143. https://doi.org/10.32479/ijeep.7535
22. Hassan, M., Kouzez, M., Lee, J. Y., Msolli, B., & Rjiba, H. (2024). Does increasing environmental policy stringency enhance renewable energy consumption in OECD countries? Energy Economics, 129. https://doi.org/10.1016/j.eneco.2023.107198
23. Idroes, G. M., Rahman, H., Uddin, I., Hardi, I., & Falcone, P. M. (2024). Towards sustainable environment in North African countries: The role of military expenditure, renewable energy, tourism, manufacture, and globalization on environmental degradation. Journal of Environmental Management, 368. https://doi.org/10.1016/j.jenvman.2024.122077
24. IEA. (2022). CO₂ emissions in 2020 – Global energy review. International Energy Agency. https://www.iea.org/reports/global-energy-review-co2-emissions-in-2020
25. Ilyas, M., Mu, Z., Akhtar, S., Hassan, H., Shahzad, K., Aslam, B., & Maqsood, S. (2024). Renewable energy, economic development, energy consumption and its impact on environmental quality: New evidence from South East Asian countries. Renewable Energy, 223, 119961. https://doi.org/10.1016/J.RENENE.2024.119961
26. IPCC. (2023). Climate change 2023: Synthesis report. Intergovernmental Panel on Climate Change. https://www.ipcc.ch/report/ar6/syr/
27. Jahanger, A., Hossain, M. R., Onwe, J. C., Ogwu, S. O., Awan, A., & Balsalobre-Lorente, D. (2023). Analyzing the N-shaped EKC among top nuclear energy generating nations: A novel dynamic common correlated effects approach. Gondwana Research, 116, 73–88. https://doi.org/10.1016/j.gr.2022.12.012
28. Jiang, W., Cole, M., Sun, J., & Wang, S. (2022). Innovation, carbon emissions and the pollution haven hypothesis: Climate capitalism and global re-interpretations. Journal of Environmental Management, 307. https://doi.org/10.1016/j.jenvman.2022.114465
29. Jozwik, B. (2025). Trade openness, economic growth, capital, and financial development: Implications for renewable energy consumption and carbon emissions. Preprints. https://doi.org/10.20944/preprints202502.0333.v1
30. Kelly, A. M., & Nembot Ndeffo, L. (2024). Understanding the nexus: economic complexity and environmental degradation in Sub-Saharan Africa. Clean Technologies and Environmental Policy. https://doi.org/10.1007/s10098-024-02885-0
31. Kocakaya, G. (2024). Revealing the environmental cost of globalization: An empirical analysis on trade openness, FDI, and CO₂ emissions in APEC countries (1990–2020). Yönetim ve Ekonomi Araştırmaları Dergisi, 22(3), 1–29. https://doi.org/10.11611/yead.1368927
32. Lacheheb, M., Rahim, A. S. A., & Sirag, A. (2015). Economic growth and carbon dioxide emissions: Investigating the environmental kuznets curve hypothesis in Algeria. International Journal of Energy Economics and Policy, 5(4), 1125–1132.
33. Li, W., Qiao, Y., Li, X., & Wang, Y. (2022). Energy consumption, pollution haven hypothesis, and Environmental Kuznets Curve: Examining the environment–economy link in belt and road initiative countries. Energy, 239. https://doi.org/10.1016/j.energy.2021.122559
34. Liu, B. (2023). Should Asia Pacific Economic Cooperation countries put all their eggs in renewable energy? Energy Policy, 177, 113599. https://doi.org/10.1016/j.enpol.2023.113599
35. Luo, R., Ullah, S., & Ali, K. (2021). Pathway towards sustainability in selected asian countries: Influence of green investment, technology innovations, and economic growth on CO2 emission. Sustainability (Switzerland), 13(22). https://doi.org/10.3390/su132212873
36. Magazzino, C., Toma, P., Fusco, G., Valente, D., & Petrosillo, I. (2022). Renewable energy consumption, environmental degradation and economic growth: the greener the richer? Ecological Indicators, 139. https://doi.org/10.1016/j.ecolind.2022.108912
37. Mahmood, H., Alkhateeb, T. T. Y., & Furqan, M. (2020). Industrialization, urbanization and CO2 emissions in Saudi Arabia: Asymmetry analysis. Energy Reports, 6, 1553–1560. https://doi.org/10.1016/j.egyr.2020.06.004
38. Managi, S., Hibiki, A., & Tsurumi, T. (2009). Does trade openness improve environmental quality? Journal of Environmental Economics and Management, 58(3), 346–363. https://doi.org/10.1016/j.jeem.2009.04.009
39. Maneejuk, P., & Yamaka, W. (2022). Revisiting the Environmental Kuznets Curve hypothesis in OECD during 1970–2016: Panel smooth transition regression. Energy Reports, 8, 41–47. https://doi.org/10.1016/j.egyr.2022.10.210
40. Mbe-Nyire Mpuure, D., Duodu, E., Braimah Abille, A., & Atanga Ayamga, E. (2024). The environmental impact of international trade in Sub-Saharan Africa: Exploring the role of policy and institutions for environmental sustainability. Research in Globalization, 9. https://doi.org/10.1016/j.resglo.2024.100240
41. Montagna, S. (2025). Sectoral economic complexity and environmental degradation: A sectoral perspective on the EKC hypothesis. Humanities and Social Sciences Communications.
42. Muratoğlu, et al. (2024). Testing the environmental Kuznets Curve hypothesis at the sectoral level for OECD countries: A nonlinear approach. Frontiers in Energy Research.
43. Muratoğlu, Y., Songur, M., Uğurlu, E., & Şanlı, D. (2024). Testing the environmental Kuznets Curve hypothesis at the sector level: Evidence from PNARDL for OECD countries. Frontiers in Energy Research, 12. https://doi.org/10.3389/fenrg.2024.1452906
44. Nathaniel, S., & Iheonu, C. O. (2019). Carbon emissions, urbanization and trade openness: Empirical evidence from African countries. Environmental Science and Pollution Research, 26(3), 3281–3291. https://doi.org/10.1007/s11356-018-3885-0
45. Navarro-Chávez, C. L., Ayvar-Campos, F. J., & Camacho-Cortez, C. (2023). Tourism, economic growth, and environmental pollution in APEC economies, 1995–2020: An econometric analysis of the Kuznets hypothesis. Economies, 11(10), 264. https://doi.org/10.3390/economies11100264
46. Nulambeh, N. A., & Jaiyeoba, H. B. (2024). Could industrialization and renewable energy enhance environmental sustainability: An empirical analysis for Sub-Saharan Africa? World Development Sustainability, 5. https://doi.org/10.1016/j.wds.2024.100191
47. Özkan, O., Olasehinde-Williams, G., & Usman, O. (2024). Foreign direct investment and ecological efficiency in Pakistan: A new perspective on the pollution haven hypothesis. International Journal of Environmental Science and Technology, 21(13), 8403–8416. https://doi.org/10.1007/s13762-024-05606-8
48. Ozturk, I., Farooq, S., Majeed, M. T., & Skare, M. (2024). An empirical investigation of financial development and ecological footprint in South Asia: Bridging the EKC and pollution haven hypotheses. Geoscience Frontiers, 15(4). https://doi.org/10.1016/j.gsf.2023.101588
49. Poumanyvong, P., & Kaneko, S. (2010). Does urbanization lead to less energy use and lower CO₂ emissions? A cross-country analysis. Ecological Economics, 70(2), 434–444. https://doi.org/10.1016/j.ecolecon.2010.09.029
50. Qi, J. (2024). Greening economic sectors through trade liberalization and efficient governance. Humanities and Social Sciences Communications, 11(1). https://doi.org/10.1057/s41599-024-04214-8
51. Rabbi, M. F., & Abdullah, M. (2024). Fossil fuel CO2 emissions and economic growth in the Visegrád region: A study based on the environmental kuznets curve hypothesis. Climate, 12(8). https://doi.org/10.3390/cli12080115
52. Rahman, M. M., & Alam, K. (2022). CO₂ emissions in Asia–Pacific region: Do energy use, economic growth, financial development, and international trade have detrimental effects? Sustainability, 14(9), 5420. https://doi.org/10.3390/su14095420
53. Renyong, H., & Sedik, A. A. (2023). Environmental sustainability and foreign direct investment in East Africa: Institutional and policy benefits for environmental sustainability. Sustainability (Switzerland), 15(2). https://doi.org/10.3390/su15021521
54. Schneiter, P., & Mellon-Bedi, S. (2025). The environmental kuznets curve revisited: A spatial panel model with heterogeneous coefficients. Energy Economics, 143. https://doi.org/10.1016/j.eneco.2025.108237
55. Şerifoğlu, M. M., & Öge Güney, P. (2024). Is the environmental Kuznets curve (EKC) hypothesis still valid for OECD countries? A comprehensive analysis across multiple sources. Quality and Quantity. https://doi.org/10.1007/s11135-024-01945-3
56. Shabir, M., Hussain, I., Işık, Ö., Razzaq, K., & Mehroush, I. (2023). The role of innovation in environmental-related technologies and institutional quality to drive environmental sustainability in APEC countries. Frontiers in Environmental Science, 11, 1174827. https://doi.org/10.3389/fenvs.2023.1174827
57. Shah, W. U. H., Hao, G., Yan, H., Zhu, N., Yasmeen, R., & Dincă, G. (2023). Role of renewable, non-renewable energy consumption and carbon emission in energy efficiency and productivity change: Evidence from G20 economies. Geoscience Frontiers, 101631. https://doi.org/10.1016/J.GSF.2023.101631
58. Shahbaz, M., Solarin, S. A., Hammoudeh, S., & Shahzad, S. J. H. (2015). Bounds testing approach to analyzing the environment Kuznets curve hypothesis with structural break: The role of renewable energy consumption and trade in the USA. Energy Economics, 48, 347–361. https://doi.org/10.1016/j.eneco.2014.12.025
59. Sitthivanh, P., & Srithilat, K. (2022). The impact of foreign direct investment on environmental quality in ASEAN Countries. Journal of Resources, Energy and Development, 18(1–2), 27–40. https://doi.org/10.3233/red-181202
60. Song, M. J., Seo, Y. J., & Lee, H. Y. (2023). The dynamic relationship between industrialization, urbanization, CO2 emissions, and transportation modes in Korea: empirical evidence from maritime and air transport. Transportation, 50(6), 2111–2137. https://doi.org/10.1007/s11116-022-10303-x
61. Sun, J., & Qamruzzaman, M. (2024). Technological innovation, trade openness, natural resources, clean energy on environmental sustainably: a competitive assessment between CO2 emission, ecological footprint, load capacity factor and inverted load capacity factor in BRICS+T. Frontiers in Environmental Science, 12. https://doi.org/10.3389/fenvs.2024.1520562
62. Tang, C. F., & Tan, B. W. (2015). The impact of energy consumption, income and foreign direct investment on carbon dioxide emissions in Vietnam. Energy, 79, 447–454. https://doi.org/10.1016/j.energy.2014.11.033
63. Vo, D. H., Ho, C. M., & Vo, A. T. (2024). Do urbanization and industrialization deteriorate environmental quality? Empirical evidence from Vietnam. SAGE Open, 14(2). https://doi.org/10.1177/21582440241258285
64. Wang, Q., Li, Y., & Li, R. (2024). Rethinking the environmental Kuznets curve hypothesis across 214 countries: the impacts of 12 economic, institutional, technological, resource, and social factors. Humanities and Social Sciences Communications, 11(1). https://doi.org/10.1057/s41599-024-02736-9
65. Xiao, Y., Gao, K., & Sun, R. (2022). Modeling the Impact of Foreign Direct Investment on China’s Carbon Emissions: An Economic and Environmental Paradigm. Frontiers in Environmental Science, 10. https://doi.org/10.3389/fenvs.2022.922208
66. Xuan, V. N. (2025). Nexus of foreign direct investment, GDP, renewable energy, trade openness, and carbon emissions: Evidence from emerging economies. Energy Reports, 11, 210–223. https://doi.org/10.1016/j.egyr.2025.01.098
67. Yang, X. (2022). Real oil prices, trade openness, income inequality, and carbon emissions: New evidence from panel data analysis. Energy Strategy Reviews, 42, 100899. https://doi.org/10.1016/j.esr.2022.100899
68. Yingjun, Z., Jahan, S., & Qamruzzaman, M. (2024). Technological innovation, trade openness, natural resources, and environmental sustainability in Egypt and Turkey: Evidence from load capacity factor and inverted load capacity factor with Fourier functions. Sustainability (Switzerland), 16(19). https://doi.org/10.3390/su16198643
69. Yu, Y., Zhao, J., Musah, M., Owusu-Akomeah, M., Nkyi, J. A., Li, J., Appiagyei Ampong, G. O., Kumah, E. A., Cao, S., Xu, Y., Shi, Y., Wang, L., Hui, C., & Li, K. (2024). Does industrialization promote the emission mitigation agenda of East Africa? a pathway toward environmental sustainability. Frontiers in Environmental Science, 12. https://doi.org/10.3389/fenvs.2024.1305852
70. Zhang, Y. J., & Cheng, H. M. (2009). Energy consumption, carbon emissions, and economic growth in China. Ecological Economics, 68(10), 2706–2712. https://doi.org/10.1016/j.ecolecon.2009.05.011
71. Zhou, J., Kafeel, K., Khan, S., Zhang, S., & Suplata, M. (2025). Will reducing the service trade barrier improve environmental performance in OECD countries?. Environment, Development and Sustainability. https://doi.org/10.1007/s10668-025-06054-1
72. Zhou, R. (2025). The impact of trade openness on carbon emissions: Evidence from panel data analysis. Energies, 18(3), 697. https://doi.org/10.3390/en18030697
73. Zhu, Z., Jia, Q., Xie, S., Song, K., Zhang, T., Cai, R., & Wang, H. (2024). Estimating the impacts of economic globalization and natural resources on ecological footprints within the N-shaped EKC in the Next 11 economies. Scientific Reports, 14(1), 27465. https://doi.org/10.1038/s41598-024-78461-9
74. Zugravu-Soilita, N. (2018). The impact of trade in environmental goods on pollution: what are we learning from the transition economies’ experience?. Environmental Economics and Policy Studies, 20(4), 785–827. https://doi.org/10.1007/s10018-018-0215-z