Trade openness, carbon emission and poverty reduction dynamics in South Africa: A causality test

Abstract

The causal relationship between trade openness, carbon emission and poverty reduction in South Africa was examined using data from 1980 to 2023. The study was motivated by the high levels of poverty, carbon emission and trade openness existing in South Africa at the same time, despite policies implemented to reduce poverty and carbon emission and elevate sustainable trade. The primary objective of this study was to establish the causal relationship between carbon emission, poverty reduction and trade openness in South Africa. Employing autoregression distribution lag (ARDL) error correction-based causality approach, the study found a bidirectional causality between trade openness and poverty reduction; carbon emission and trade openness; and poverty reduction and carbon emission in the short run. In the long run, the study found a unidirectional causal relationship from poverty reduction to trade openness and from carbon emission to trade openness. Policy implications are discussed.