The differential impact of export and import trade on carbon dioxide emissions: A comparative analysis between African and European countries

This study examines the effects of export and import trade on carbon dioxide (CO2) emissions in 49 African and 37 European countries from 2005-2021 using World Development Indicators (WDI). Export and import trade has a differential effect on CO2 emissions in both Africa and Europe, though African countries generally have lower emissions than European countries with an increasing trend. Trade is crucial in both regions, but the environmental impact remains uncertain. The study emphasized the two-step system generalized method of moments (GMM) and a quadratic function. The results indicate that: 1) Export trade increases CO2 emissions in both regions in the short and long term. 2) Import trade reduces CO2 emissions in Africa in the short and long-term, but has no significant negative long-term impact in Europe except in the short run. 3) There was no evidence of an environmental Kuznets curve (EKC) but a U-shaped relationship between trade and CO2. 4) Early development witnesses the halo effect, which transitions to the pollution haven hypothesis after a turning point in both regions. The study recommends that both regions should adopt environmentally friendly trade policies that should aim at reducing CO2 in the export trade nexus.