Emissions-foreign trade nexus: establishing the need to harmonize environment and economics in RCEP

Abstract

PurposeThis article investigates the impact of foreign trade on carbon emissions of the member countries of the largest trade bloc, the Regional Comprehensive Economic Partnership (RCEP).Design/methodology/approachThe aggregate bilateral trade with members of RCEP during the period 1991–2020 was considered for analysis. The study also examines the impact of foreign trade (between member countries) on economic development, represented by GDP per capita. Dumitrescu–Hurlin panel Granger causality test was conducted to understand the impact of foreign trade on GDP per capita and carbon emissions.FindingsResults indicate that though foreign trade is heterogeneously Granger causing GDP per capita, it also aggravates carbon emissions in RCEP bloc.Originality/valueThe study is of significance to the policymakers in the member countries as it provides evidence to include climate impact in trade agreements. The wealthier RCEP member countries can support the green transition of low-income countries through transfer of eco-friendly technologies.