—This study investigates the dynamic relationship
between trade, environment and economic development in East
Asia. Empirical analysis based on panel cointegration technique
suggests that there is a long-run stable relationship among
economic development, trade and environmental pollution in
East Asia. In order to examine the role of the level of economic
development, the sample is extended to include some major
world economies. The extended sample was then divided into
three groups: East Asia, developed countries and developing
countries. The estimated results based on panel VAR suggest
the presence of interrelationship among all variables in each of
three country-groups. The impulse response analysis reveals
that shocks to economic development and trade in developing
countries lead to a large increase in pollution. However, in the
case of developed countries, an increase in GDP results in a
decrease in pollution. We find that the level of economic
development plays a crucial part in determining the direction of
the interrelationship among trade, environment and economic
—International trade, environment, economic
development, panel VAR.
Jingjing Zhang is with the University of Western Sydney, School of
Business, NSW 2751, Australia (e-mail:email@example.com).
Cite: Jingjing Zhang, "Trade, Environment and Economic Development: A Dynamic Relationship in East Asia," International Journal of Trade, Economics and Finance vol.5, no.5, pp. 379-385, 2014.