The effects of population growth, environmental quality and trade openness on economic growth: A panel data application

The purpose of this paper is to explore the effects of population growth (PG), environmental quality and trade openness on economic growth of major developed and developing countries.

The authors have used the panel unit root and panel co-integration tests over the period 1960-2013. Granger causality test is used to find out the direction of causality between the variables.

There is a bi-directional relationship between economic growth and trade openness, and a unidirectional relation, running from trade openness to CO₂ emissions in the three developed countries. PG has a positive effect on economic growth in three developing countries and there exists a bidirectional relationships between CO₂ emissions and PG and a unidirectional relationship from PG to economic growth and from trade openness to economic growth. Furthermore, there is a unidirectional relationship from PG to economic growth and bidirectional relationships between trade openness and economic growth for the six selected countries.

This is the first comprehensive research that combined the selected three major developed and three major emerging countries of the world to explore the effects of three important variables on economic growth. The authors’ findings will help the policy makers as well as the people of these six countries. this study has shown the aggregate and disaggregate results, so a comparison between the groups of countries is possible. Therefore, this research has significant contributions.