Trade Globalization and Environmental Sustainability: Sectoral Heterogeneity and Moderation Evidence From OECD Countries

ABSTRACT Environmental degradation, particularly rising CO 2 emissions, has become a prominent global policy concern owing to its threat to climate stability, ecological viability, and long‐term economic prosperity. Social factors such as population shifts, income, industrial activity, financial development, and technological dissemination influence CO 2 emissions in addition to globalization. This study utilized an extended STIRPAT framework to analyze trade globalization and CO 2 emissions in 32 OECD economies from 2005 to 2023. FMOLS, DOLS, and panel quantile regression with country‐cluster bootstrap inference complement a country fixed‐effects model with Driscoll‐Kraay standard errors. The study examines the dimensions of globalization, sectoral linkages, and moderations. Trade globalization positively affects emissions in the baseline and both long‐run estimators, but its coefficients are insignificant across conditional quantiles. The share of the working‐age population, industrial value added, and domestic credit to the private sector increase emissions, whereas internet use decreases them. Economic and interpersonal globalization also boosts emissions. Sectoral estimations link industrial value added to higher emissions and service value added to lower emissions. Industry and agriculture boost trade‐emissions, but manufacturing and services weaken it, according to the interaction estimates. These findings emphasize the importance of sectoral mix in trade globalization environmental assessments. They advocate integrating sector‐specific environmental measures, cleaner production, and technology dissemination into trade policy to balance international economic integration with OECD emissions‐reduction objectives.