Does Trade Openess and Transportation Intensity Promote Enviromental Degradation in Indonesia?

Mochammad Yusuf; Difa Riza Fahlefi

doi:10.32424/1.erjpe.2022.17.2.3166

Does Trade Openess and Transportation Intensity Promote Enviromental Degradation in Indonesia?

Mochammad Yusuf, Difa Riza Fahlefi

Abstract

Transportation is one of the most important sectors in supporting all economic activities in order to support inclusive economic development. However, in its development, trade openness triggers high economic activity that triggers environmental pollution, one of which is the impact of the transportation sector. This study aims to estimate the effect of trade openness and transportation intensity as well as total factor productivity as a proxy for technological development on the growth of carbon emissions in Indonesia. The methods used in this research are Engle-Granger ECM and Granger Causality. The results show that in the long-term trade openness and transportation intensity have a significant positive effect, while the total productivity factor has a significant negative effect. In the short term with the same direction of influence, total productivity factors and transportation intensity have a significant effect, but trade openness does not have a significant effect. Furthermore, there is a unidirectional effect of fossil energy consumption on transportation intensity & trade oponess on transportation intensity. Last, transportation intensity and trade openness have been shown to have a bidirectional relationship.

Full Text:

PDF

References

Abdulai, A., & Ramcke, L. (2009). The impact of trade and economic growth on the environment: revisiting the cross-country evidence. In Kiel Working Paper no 1491.

Alhassan, H. (2021). The effect of agricultural total factor productivity on environmental degradation in sub-Saharan Africa. Scientific African, 12(7), 1–8. https://doi.org/10.1016/j.sciaf.2021.e00740

Antweiler, W., Copeland, B., & Taylor, S. (1998). is free trade good for environment?

Banister, D. (2011). TRANSPORTATION AND THE ENVIRONMENT. Annual Review of Environment and Resources, 36.

Bressler, S. L., & Seth, A. K. (2010). Wiener – Granger Causality : A well established methodology. NeuroImage. https://doi.org/10.1016/j.neuroimage.2010.02.059

Demirel, H. (2008). Exploring impacts of road transportation on environment : a spatial approach. Desalination, 226, 279–288. https://doi.org/10.1016/j.desal.0000.00.000

Feridun, M. (2006). Impact of Trade Liberalization on the Environment in Developing Countries. Journal of Developing Societies, 22(1), 39–56. https://doi.org/10.1177/0169796X06062965

Giles-Corti, B., Vernez-Moudon, A., Reis, R., Turrell, G., Dannenberg, A. L., Badland, H., Foster, S., Lowe, M., Sallis, J. F., Stevenson, M., & Owen, N. (2016). City planning and population health: a global challenge. The Lancet, 388(10062), 2912–2924. https://doi.org/10.1016/S0140-6736(16)30066-6

Gujarati. D. N. (2004). Basic Econometrics (4th edition (ed.)). McGraw-Hill Companies.

Holmberg, K., & Erdemir, A. (2015). Global impact of friction on energy consumption, economy and environment. FME Transactions, 43(3), 181–185. https://doi.org/10.5937/fmet1503181H

Hongshan, A., Hu, S., Li, K., & Shao, S. (2020). Environmental regulation, total factor productivity, and enterprise duration: Evidence from China. Business Strategy and the Environment, 29(6), 2284–2296. https://doi.org/10.1002/bse.2502

Le, T. H., Chang, Y., & Park, D. (2016). Trade openness and environmental quality: International evidence. Energy Policy, 92, 45–55. https://doi.org/10.1016/j.enpol.2016.01.030

Li, K., Fang, L., & He, L. (2019). How population and energy price affect China’s environmental pollution? Energy Policy, 129(January), 386–396. https://doi.org/10.1016/j.enpol.2019.02.020

Li, K., Gong, W., & Choi, B. (2021). The Influence of Trade and Foreign Direct Investment on Green Total Factor Productivity : Evidence from China and Korea. Journal of Korea Trade, 25(2), 95–110.

Morin, J., Dür, A., & Lechner, L. (2018). Mapping the Trade and Environment Nexus : Insights from a New Data Set. Global Environmental Politics, 18(1), 122–139. https://doi.org/10.1162/GLEP

Rusiawan, W., Tjiptoherijanto, P., Suganda, E., & Darmajanti, L. (2015). Assessment of green total factor productivity impact on sustainable Indonesia productivity growth. Procedia Environmental Sciences, 28(6221), 493–501. https://doi.org/10.1016/j.proenv.2015.07.059

Suh, S. (2016). Are Transportation services better for climate change? Environmental Science and Technology, 40(21), 6555–6560. https://doi.org/10.1021/es0609351

Tánczos, K., & Török, Á. (2008). Impact of transportation on environment. Transportation Engineering, 36(2), 105–110.

Wang, D., Nie, R., & Shi, H. Y. (2011). Scenario analysis of China’s primary energy demand and CO2 emissions based on IPAT model. Energy Procedia, 5, 365–369. https://doi.org/10.1016/j.egypro.2011.03.062

Woodcock, J., Banister, D., Edwards, P., Prentice, A. M., & Roberts, I. (2007). Energy and transport. Lancet, 370(9592), 1078–1088. https://doi.org/10.1016/S0140-6736(07)61254-9

Wu, Y., Song, Y., & Deng, G. (2017). Institutional Environment, OFDI, and TFP Growth: Evidence from China. Emerging Markets Finance and Trade. https://doi.org/10.1080/1540496X.2017.1283612

Yingfei, Y., Mengze, Z., Zeyu, L., & Ki-hyung, B. (2022). Journal of King Saud University – Science Green logistics performance and infrastructure on service trade and environment-Measuring firm ’ s performance and service quality. Journal of King Saud University - Science, 34(1), 101683. https://doi.org/10.1016/j.jksus.2021.101683

DOI: https://doi.org/10.32424/1.erjpe.2022.17.2.3166