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The Effect of Trade Openness on Deforestation: Empirical Analysis for 142 Countries

  • Tetsuya, Tsurumi
  • Shunsuke, Managi

This study explores the effect of trade openness on deforestation. Previous studies do not find a clear effect of trade openness on deforestation. We use updated data on the annual rate of deforestation for 142 countries from 1990 to 2003, treat trade and income as endogenous, and take into consideration an adjustment process by applying a dynamic model. We find that an increase in trade openness increases deforestation for non-OECD countries while slowing down deforestation for OECD countries. There is a possibility that both capital-labor and environmental-regulation effects have a negative impact on deforestation in developing countries, whereas the opposite holds in developed countries.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 35805.

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Date of creation: 30 Dec 2011
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Handle: RePEc:pra:mprapa:35805
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  1. Cropper, Maureen & Griffiths, Charles, 1994. "The Interaction of Population Growth and Environmental Quality," American Economic Review, American Economic Association, vol. 84(2), pages 250-54, May.
  2. Panayotou, Theodore, 1997. "Demystifying the environmental Kuznets curve: turning a black box into a policy tool," Environment and Development Economics, Cambridge University Press, vol. 2(04), pages 465-484, November.
  3. Jean-Louis Arcand & Sylviane Guillaumont Jeanneney & Patrick Guillaumont, 2008. "Deforestation and the Real Exchange Rate," Post-Print hal-00274384, HAL.
  4. World Bank, 2010. "World Development Report 2010," World Bank Publications, The World Bank, number 4387, September.
  5. Bhattarai, Madhusudan & Hammig, Michael, 2001. "Institutions and the Environmental Kuznets Curve for Deforestation: A Crosscountry Analysis for Latin America, Africa and Asia," World Development, Elsevier, vol. 29(6), pages 995-1010, June.
  6. Simon N. Wood, 2004. "Stable and Efficient Multiple Smoothing Parameter Estimation for Generalized Additive Models," Journal of the American Statistical Association, American Statistical Association, vol. 99, pages 673-686, January.
  7. Werner Antweiler & Brian R. Copeland & M. Scott Taylor, 2001. "Is Free Trade Good for the Environment?," American Economic Review, American Economic Association, vol. 91(4), pages 877-908, September.
  8. Culas, Richard J., 2007. "Deforestation and the environmental Kuznets curve: An institutional perspective," Ecological Economics, Elsevier, vol. 61(2-3), pages 429-437, March.
  9. MANAGI Shunsuke & HIBIKI Akira & TSURUMI Tetsuya, 2008. "Does Trade Liberalization Reduce Pollution Emissions?," Discussion papers 08013, Research Institute of Economy, Trade and Industry (RIETI).
  10. Lopez Ramon, 1994. "The Environment as a Factor of Production: The Effects of Economic Growth and Trade Liberalization," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 163-184, September.
  11. Nguyen Van, Phu & Azomahou, Theophile, 2007. "Nonlinearities and heterogeneity in environmental quality: An empirical analysis of deforestation," Journal of Development Economics, Elsevier, vol. 84(1), pages 291-309, September.
  12. Tetsuya Tsurumi & Shunsuke Managi, 2010. "Decomposition of the environmental Kuznets curve: scale, technique, and composition effects," Environmental Economics and Policy Studies, Society for Environmental Economics and Policy Studies - SEEPS, vol. 11(1), pages 19-36, February.
  13. Simon N. Wood, 2008. "Fast stable direct fitting and smoothness selection for generalized additive models," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 70(3), pages 495-518.
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