The Impact of Trade Liberalization on the Greenhouse Gases (CO2Emission) in EKC

Trade linearization according to scale, composite, and technology effects, changes the environment quality. On the other hand, trade liberalization, increases capital flow in the world. Based on Pollution Haven Hypothesis, polluted intensive industries move from the countries with stringent environmental policies to those with more relaxed environmental policies. In order to evaluate the effect of trade liberalization on Co2 emission, and to examine the relationship between pollution Haven Hypothesis and Kuznet's Environmental Curve, I employ a panel data method with fixed effect approach to estimate an econometric model for four groups of countries: counters with a high per capita income, with a middle-high per capita income, with middle-low per capita income, and with a low per capita income during the period 1992-2002. Our findings indicate that increasing trade liberalization have a negative effect on the amount of CO2 emission in the high and middle-high income countries. While trade liberalization have a positive effect on the a mount of Co2 emission in the low and middle- low income countries. Such that the Co2 emission elasticity to the export of polluting industries, and to the import of polluting industries, and the trade liberalization index in high-income countries are 0.132, -0.051, and -0.093 respectively. In the middle-high income countries, they are, 0.033, -0.049, and -0.038 respectively. Similarly, Co2 emission elasticity to the above-mentioned variables in the middle – low income countries is 0.013, -0.134, and 0.019 respectively. Finally in the low-income countries they are 0.007, 0.002, and 0.021 respectively.