Trade, Growth, and Logistics Performance: Dynamic and Distributional Insights into the Drivers of CO2 Emissions in the Mediterranean Basin

This paper examines how logistics performance conditions the relationship between trade openness, economic growth and per capita CO2 emissions in Mediterranean economies. Using an unbalanced panel of 20 countries over the period 2007–2022, we combine static fixed-effects, dynamic panel generalized method of moments (GMM) estimators and Method-of-Moments Quantile Regression (MM-QR). CO2 emissions per capita, the World Bank Logistics Performance Index (LPI), trade openness and GDP per capita are drawn from World Bank databases, and interaction terms between LPI and both income and trade openness are constructed to capture conditional effects. The results from fixed-effects and system GMM estimations show that logistics performance exerts a robust and statistically significant negative effect on emissions, whereas GDP per capita is a positive driver and trade openness tends to reduce emissions when logistics capacity is sufficiently strong. Negative and significant interaction terms between LPI and both income and openness indicate that logistics efficiency amplifies the environmental benefits of trade and growth. Quantile regressions reveal that these patterns are most pronounced in high-emission countries, where improvements in logistics performance and its interaction with trade and income generate larger marginal reductions in CO2 emissions. Overall, the findings highlight the central role of logistics modernization and green trade facilitation in reconciling trade-led growth with decarbonization in the Mediterranean Basin. From a policy perspective, the evidence suggests that prioritizing green logistics and trade facilitation—particularly in high-emission Mediterranean economies—can yield the largest marginal reductions in CO2 emissions.