Can environmental SDGs moderate trade and environment nexus? A South Asian context based on panel ARDL approach

ABSTRACT

The study renews the debate over trade openness and environmental quality by empirically examining the moderating role of environmental SDGs, viz., affordable and clean energy (SDG 7) and climate action (SDG 13), in South Asia. Static panel regression analysis is undertaken, followed by a panel ARDL approach and the Engle-Granger causality test. All eight South Asian countries and a study period of 2002–2019 constitute the panel data set for the present analysis. The result suggests that while SDG 7 is a game changer in doing away with the pollution haven, the moderating impacts of SDG 7 and SDG 13 further reinforce the EKC hypothesis in the region. Both SDG 7 and SDG 13 exhibit long-run moderating effects on the pollution haven, and SDG 13 is observed to have a short-run moderating causal impact. The novel introduction of environmental SDGs to resolve the classical trade and environment debate has policy implications for simultaneous advancements towards SDG 7 and SDG 13. The study is valuable from the perspective of international cooperation, particularly when South Asian economies are not beyond the gloom of global permacrisis.

KEYWORDS:

• Environmental quality
• panel ARDL
• SDGs
• South Asia
• trade openness

JEL CODES:

• Q01
• C23
• F18

Acknowledgments

The author sincerely extends thanks to anonymous reviewers for their valuable suggestions. Also, sincere gratitude goes to the editor, the co-editor, and other esteemed members of the Editorial Board of Applied Economics for considering this academic endeavor.

Disclosure statement

No potential conflict of interest was reported by the author.