The effects of trade openness on deforestation in the Congo Basin countries

Abstract

This study investigates the effects of trade openness on deforestation in the six countries of the Congo Basin using a panel data model. An up-to-date database on forest cover is utilized for the period 1990–2020. The feasible generalized least squares, seemingly unrelated regression, correlated panels corrected standard errors, and Driscoll and Kraay standard errors estimators are employed in this study to account for heteroskedasticity, autocorrelation, and cross-sectional dependence. Given the presence of cointegration, the dynamic ordinary least squares for cointegrated panel data is also utilized to estimate the model. The results indicate that an increase in trade openness is associated with a higher rate of deforestation. This finding is further supported by the robustness check conducted using the Trade Globalisation Index. Furthermore, a U-shaped relationship is observed between deforestation and income, which contradicts the Environmental Kuznets Curve hypothesis.