Does technological innovation limit trade-adjusted carbon emissions?

The objective of this analysis is to examine the impact of international trade and technological innovation over the 1990-2018 period on the G7 economy's consumption-based carbon emissions. The report explores international trade by separately considering imports and exports. The results indicate that the data cross-sections are dependent and that the panel has slope heterogeneity. The results of the co-integration study indicate that imports, exports of technological innovation, GDP, and demand-related carbon emissions are co-integrated with systemic splits (2001 mild recession, 2008 financial crises, and 2011 decline of stock market, and 2014 export decline). The cross sectionally augmented autoregressive distributive lag model results show that technological innovation and exports have a negative effect on the use of carbon. Meanwhile, imports and GDP are positive associated with carbon emissions based on consumption. The analysis of the robustness test also verifies these impacts. The results of this research study show that policymakers and regulators can encourage technological innovation to reduce carbon pollution and improve the sustainability of the environment.

Automated summary

This study examines the impact of international trade and technological innovation on consumption-based carbon emissions in the G7 economy. Results show that technological innovation and exports have a negative impact on carbon emissions, while imports and GDP are positively associated with carbon emissions. Policymakers can encourage technological innovation to reduce carbon pollution and enhance environmental sustainability.