Seyed-nezamuddin MAKİYAN, Mahsa SAEEDİ GORAGHANİ, Mehdi NEJATI

Trade Liberalization and Environmental Pollution in Iran

The environment is one of the main concerns in global policies and affects many of the other factors including economic and political. This study aims to express the effect of the trade liberalization policy on environmental pollution in the frame of a multi-regional system model. Thus, the GTAP-E model was utilized for the year 2019, so that the environmental consequences (in terms of measurement of CO2 emission) studied as the result of reducing the tariffs on import. In two scenarios, the impact of the shock of reduction importation tariffs on the gross domestic production, CO2 emissions and the sum of the value added of the economy in the eight sections introduced in the model as indicators, technical and composition effects. The results in both cases indicate a reduction in the scale, technical and composition effects, and thus improve the environment.

Trade Liberalization and Environmental Pollution in Iran

The environment is one of the main concerns in global policies and affects many other factors including the economy. Trade liberalization would affect environmental quality through its effect on production. This study aims to express the effect of the trade liberalization policy on environmental pollution in the frame of a multi-regional system model. Thus, the GTAP-E model was utilized for the year 2019, so that the environmental consequences (in terms of measurement of CO2 emission) could be studied as the result of reducing the tariffs on import in the forms of two scenarios. In the first scenario, the import tariff on agricultural, industry and services products was reduced by 5%, and in the second scenario, the import tariff on the agricultural, industry and services sectors was reduced by 5%, 10% and 15%, respectively. The results obtained in both cases indicate a reduction in the effect of scale, technique and composition. The results indicate that an import tariff reduction in the various sectors of the economy reduces pollution emissions and its effects improve the environment. The second scenario has a greater effect on the different sectors and also is closer to the reality of Iran’s economy.

Keywords:

Trade liberalization, Environment pollution CO2 emission, Global trade analysis project model, Tariff,

PDF

___

Abdouli, M. & Hammami, S. (2016). The dynamic links between environmental quality, foreign direct investment and economic growth in the Middle Eastern and North African countries (MENA region). Econpapers, 9, 833853, DOI:10.1007/s13132-016-0369-5. google scholar
Abduli, A. & Ramcke, L., (2009). The impact of trade and economic growth on the environment: revisiting the cross-country evidence. Kiel Working Paper, No. 1491, https://doi.org/10.1002/jid.1789. google scholar
Antweiler, W., Copeland, B.R. & Taylor, M.S., (2001). Is free trade good for the environment, American Economic Review, Vol. 91, 877- 908, https://www.jstor.org/stable/2677817. google scholar
Arsalan Wasti, S. K. & Waqar Zaidi, S. (2020). An empirical investigation between CO2 emission, energy consumption, trade liberalization and economic growth: a case of Kuwait, Journal of Building Engineering, 28(21), DOI: 10.1016/j.jobe.2019.101104. google scholar
Barghi Oskooyi, B. (2008). The effects of trade liberalization on the release of greenhouse gases (Carbon Dioxide) in environmental Kuznets Curve, Journal of Economic Studies, Vol. 43 (1), 1-15, (in Persian), http://jpbud.ir/ article-1-175-en.html. google scholar
Bekun, F.V., Emir, F. & Sarkodie, S.A. (2021). Another look at the relationship between energy consumption, carbon dioxide emissions and economic growth in South Africa, Science of Total Environment, Vol. 655, 759765, https://doi.org/10.1016/j.scitotenv.2018.11.271. google scholar
Beladi, H. & Oladi, R. (2011). Does trade liberalization increase global pollution, Resource and Energy Economics, 33(1), 172-178, https://doi.org/10.1016/j.reseneeco.2010.04.009. google scholar
Bostan, Y. (2018). The effect of trade liberalization in the industrial sector on the quality of the environment in Iran, Environmental Researches, Vol. 8 (16). 103-114, (in Persian), @20.1001.1.20089597.1396.8.16.14.2. google scholar
Destek, M.A. & Sarkodie, S.A., (2019). Investigation of environmental Kuznets Curve for ecological footprint: the role of energy and financial development, Science of Total Environment, Vol. 650, 2483-2489, https://doi. org/10.1016/j.scitotenv.2018.10.017. google scholar
Dong, K., Sun, R. & Dong, X. (2018). CO2 emissions, natural gas and renewables, economic growth: assessing the evidence from China, Science of Total Environment, Vol. 640, 293-302, https://doi.org/10.1016/j. scitotenv.2018.05.322. google scholar
Frankel, J. & Rose, A. (2002). Is trade good or bad for the environment? Sorting out the causality. The Review of Economics and Statistics, Vol. 87 (1), 85-91, https://doi.org/10.1162/0034653053327577. google scholar
Gozgor, G. & Can, M., (2016). Export product diversification and the environmental Kuznets curve: evidence from Turkey, National Center for Biotechnology Information, MPRA Paper, No. 78410, DOI: 10.1007/s11356-016-7403-9. google scholar
Grossman, G. M. & Krueger, A. B. (1991). Environmental impacts of a North American free trade agreement. National Bureau of Economic Research, Working Paper. Vol. 3914. NBER, DOI 10.3386/w3914. google scholar
Grossman, G.M., & Krueger, A.B. (1995). Economic growth and the environment, Quarterly Journal ofEconomics, Vol. 110 (2), 353-377, https://doi.org/10.2307/2118443. google scholar
Jha, S. & Gamper-Rabindran, S. (2004). Environmental impact of India’s trade liberalization, SSRN, http://dx.doi. org/10.2139/ssrn.574161. google scholar
Kolcava, D., Nguyen, Q. & Bernauer, T. (2019). Does trade liberalization lead to environmental burden shifting in the global economy? Ecological Economics, Vol. 163, 98-112, https://doi.org/10.1016/j.ecolecon.2019.05.006. google scholar
Kuznets, S. (1995). Economic growth and income inequality, The American Economic Review, Vol. 45, No. 1, 1-28, https://www.jstor.org/stable/1811581. google scholar
Liu, B., Wang, D., Xu, Y., Liu, C. & Luther, M. (2018). A multi-regional input-output analysis of energy embodied in international trade of construction goods and services, Journal of Cleaner Production. Vol. 201, 439-451, https://doi.org/10.1016/j.jclepro.2018.08.029. google scholar
Managi, S. (2006). International trade, economic growth and the environment in high and low income countries, International Journal of Global Environmental, 6(4), 320-330, DOI: 10.1504/IJGENVI.2006.010888. google scholar
Liu, M., Zhang, B. & Liao, X. (2021). Can trade liberalization promote green production? Evidence from China’s manufacturing enterprises, Journal ofAsian Economics, 79, https://doi.org/10.1016/j.asieco.2021.101369. google scholar
Motevaseli, M. (2001). Trade policies and economic development, 1ed., Tehran: Institute of Commerce Researches and Studies, (Book, in Persian). google scholar
Nathaniel, S. & Khan, S.A.R. (2020). The nexus between urbanization, renewable energy, trade and ecological footprint in ASEAN countries, Journal of Cleaner Production, Vol. 272, https://doi.org/10.1016/j. jclepro.2020.122709. google scholar
Onwachukwu, C. I., Yan k. M. I. & Tu K., (2021). The causal effect of trade liberalization on the environment, Journal of Cleaner Production, Vol. 318, 1-45, https://doi.org/10.1016/j.jclepro.2021.128615. google scholar
Shafik, N. (1994). Economic development and environmental quality: an econometric analysis, Oxford Econ. Paper, 46, 757-773, https://doi.org/10.1093/oep/46.Supplement_1.757. google scholar
Shapiro, J. S. (2014). Trade, CO2, and the environment. American Economic Journal: Economic Policy, Vol. 8 (4), 353-377, https://www.jstor.org/stable/26156392. google scholar
Yang, H. Y. (2001). Trade liberalization and pollution: a general equilibrium analysis of carbon dioxide emissions in Taiwan. Economic Modeling. Vol. 18 (3), 435-454, DOI: 10.1016/S0264- 9993(00)00048-1. google scholar