The environmental consequences of globalization: A country-specific time-series analysis

The dynamic relationships among trade, income and the environment for developed and developing countries are examined using a cointegration analysis. Results suggest that trade and income growth tend to increase environmental quality in developed countries, whereas they have detrimental effects on environmental quality in most developing countries. It is also found that for developed countries, the causal relationship appears to run from trade and income to the environment — a change in trade and income growth causes a consequent change in environmental quality. For most developing countries, on the other hand, the causality is found to run from the environment to trade and income; however, the opposite causal relationship holds for China.