Econometric analysis of trade, exports, imports, energy consumption and CO2 emission in six regions

The aim of this study is to explore the bi-directional long run relationship between trade-energy consumption, trade-CO2 emission, exports-energy consumption, exports-CO2 emission, imports-energy consumption, and imports-CO2 emission. 189 countries from six different regions, namely, Asia Pacific, Eastern Europe, the Americas, Middle East and North Africa (MENA), Sub Saharan Africa (SSA), and Western Europe, were selected. The panel fully modified OLS (FMOLS) was utilized taking the period of 1990–2011. The panel results show that all the regions, excluding Eastern Europe, show a long run positive relationship between the trade variables-energy consumption and between the trade variable-CO2 emission. However, at the country level, the results reveal that the feedback long run positive relationship between the trade variables, energy consumption and CO2 emission takes place in most cases when the share of trade of goods and services to GDP is significant and the level of the countries׳ development is high. However, the negative or the non-significant long run relationship between the variables takes place generally in countries when the trade variables do not play a large share in their GDP and when these countries are in early development stages.