Unveiling the asymmetric impact of exports, oil prices, technological innovations, and income inequality on carbon emissions in India

Abstract

In the case of a developing country like India, foreign trade can play a vital role because it may help in generating employment opportunities by channelizing the finished goods and natural resources. However, the excessive production of tradable goods and imports of carbon-intense resources may have a harmful impact on biodiversity in the long run. The current situation of India appears to fall in the same category because India’s exports of manufactured goods and imports of crude oil have witnessed a sharp rise. Besides, the country’s carbon emissions have increased persistently, especially after liberal trade policy regime (i.e. after 1991). To validate this argument, in the present study, we examined the temporal impact of exports and oil prices on carbon emissions in India from 1980 to 2018. Technological innovation and income inequality are considered as the controlled variables. The empirical results calculated using the nonlinear auto-regressive distributed lag (NARDL) approach reveal that the upward-tick in exports and technological innovation led to an increase in carbon emissions. On other hand, downside movements in exports, increased oil prices, and increased income inequality helped reduce the level of carbon emissions in the long run. The study confirmed a nonlinear association between carbon emissions and its considered determinants. By taking a cue from the computed results, we proposed an SDG based policy framework, which may help policymakers achieve economic and environmental targets in the coming years.