Trade, Environment Quality and Income in MENA Region

This paper investigates the causal relationship between environmental quality, GDP and trade for MENA region countries by using panel unit root tests and panel cointegration analysis for the period 1970-2011. The results show a strong causality from GDP and trade to environmental quality in these countries. Yet, Trade and environmental quality does not have any significant effects on GDP in short- and long-run. It means that it is the trade and GDP that drives environmental quality in mentioned countries, not vice versa. So the findings of this paper support the point of view that the cost of higher trade and economic growth is paid in terms of poorer environment.