Does trade openness affect environment?

Abstract

This paper tries to find out the relationship between the openness to trade and the environment. It is raised a question that whether the more openness to trade the countries do, the more degraded quality of environment became. Besides trade intensity that possible affects environment, there are some other variables might take part into effect on environment like GDP per capita, Polity, Urbanization, Land, Population, Haven which is the interaction of Openness to trade and GDP per capita. Data of pollutants such as carbon dioxide emissions and organic water pollutant emissions were collected. The data of carbon dioxide emissions, trade intensity, GDP per capita, polity, urbanization, land, population are collected of one hundred and fifty countries from 1960 to 2008 while data of organic water pollutant emissions and same above variables are collected of seventy eight countries from 1960 to 2008. Because the data is not balanced from country to country then unbalanced panel data will be used for testing. Moreover, using the Hausman-test to test that these panel data is significant with random effect model. The result finally shows that there is a positive relationship between the openness to trade and the environment pollutions provided that other variables to be held ceteris-paribus.