DOES TRADE ALWAYS HARM THE ENVIRONMENT? A PANEL QUANTILE REGRESSION STUDY OF ASEAN ECONOMIES

Abstract

This study investigates how trade openness influences environmental quality—measured explicitly by carbon dioxide (CO₂) emissions—in nine ASEAN countries over the period 1990–2022. Using a panel quantile regression framework, the analysis uncovers heterogeneous effects across the CO₂-emission distribution, allowing for a more nuanced understanding of how trade and structural factors shape environmental outcomes in economies with differing pollution intensities. The results show that trade openness significantly increases CO₂ emissions at medium and high quantiles, indicating that environmental pressures intensify as countries become more deeply integrated into global trade, particularly in already high-emission contexts. Population size, however, does not exhibit a significant effect across quantiles, suggesting that demographic expansion alone is not a primary driver of emissions within the region. Additional control variables including economic growth, energy consumption, and industrial structure, offer further insight into the channels through which trade influences environmental performance: countries with higher reliance on fossil-fuel energy and more carbon-intensive production structures experience stronger pollution effects from trade. These findings underscore the need for ASEAN member states to integrate environmental safeguards into trade policy, promote cleaner production systems, and adopt differentiated mitigation strategies that reflect their position in the emissions distribution. By highlighting the conditional nature of trade–environment linkages, this study contributes to the broader discourse on sustainable development and supports evidence-based policymaking in emerging regional economies.

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