Abstract
In the contemporary era, it is evident that consumption-based carbon emissions (CCO2e), adjusted for international trade, are a more accurate and robust measure of environmental pollution than production-based emissions. Therefore, many studies have focused on exploring the determinants of CCO2e; however, the literature could not yet discern environment-related R&D budget (ERRD) and political risk index (PRI) as a new driver. To fill this gap, the current paper aims to divulge the dynamic effects of ERRD and PRI on CCO2e while taking imports, exports, and GDP as control regressors. To do so, the G7 nations’ data from 1990 to 2020 is utilized, and several advanced econometric tests and techniques are deployed to tackle the advanced issues (i.e., cross-section dependence, heterogeneity, and endogeneity) in econometrics. The CS-ARDL estimates suggest that PRI and ERRD significantly lessen the environmental quality by disrupting the detrimental effects of CCO2e. Likewise, the rise in exports possesses a negative association with the ratio of CCO2e. However, CCO2e significantly tends to surge on account of an increase in GDP and imports. GDP squared exhibits the negative link with CCO2e, confirming the EKC hypothesis in G7 nations. Besides, the AMG technique and causality test validate the robustness of our findings. In addition, the policies related to CCO2e by authorities will take approximately more than a year to absorb their effects.
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Data availability
The data for this study is available from the World Bank (WB, 2020), the Global Carbon Atlas (GCA, 2020), and the Organisation for Economic Co-operation and Development (OECD, 2020). The data is available upon request. The data used in this study is from 1990 to 2020.
Abbreviations
- CCO2e:
-
Consumption-based carbon emissions
- CS-ARDL:
-
Cross-sectionally augmented autoregressive distributed lags model
- G7:
-
Group of seven
- R&D:
-
Research and development
- PRI:
-
Political risk
- GDP:
-
Gross domestic product
- EX:
-
Exports
- IM:
-
Imports
- CSD:
-
Cross-section dependence
- ECM:
-
Error correction mechanism
- CCEMG:
-
Common correlated effect mean group
- AMG:
-
Augmented mean group
- CO2e:
-
Carbon dioxide emissions
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The idea of the original draft belongs to Shu Jiang, and she wrote the introduction, literature review, and empirical outcomes sections. Muhammad Zubair Chishti helped in data collection and data compiling and write up. Husam Rjoub and Syed Rahim visualized the data of the observed variables. All the authors read and approved the final manuscript.
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Jiang, S., Chishti, M.Z., Rjoub, H. et al. Environmental R&D and trade-adjusted carbon emissions: evaluating the role of international trade. Environ Sci Pollut Res 29, 63155–63170 (2022). https://doi.org/10.1007/s11356-022-20003-9
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DOI: https://doi.org/10.1007/s11356-022-20003-9