Indian Merchandise Exports and Territorial CO2 Emissions from India: A Time Series Analysis

This study confirms a significant long-run impact of increased merchandise exports in fomenting carbon emissions from India adopting an Auto-regressive Distributive Lag (ARDL)' based time series analysis. The paper checks robustness of its findings by using two alternative dependent variables as CO2 emissions and CO2 emissions from solid and liquid fuel burn and in both cases found evidence to support the hypothesis that Indian trade has grown its comparative advantage in carbon emission-intensive sectors. This study detects an endogenous structural break in the time path of both the dependent variables at the year 2001 using a modified Augmented Dickey-Fuller minimum t-statistic based breakpoint unit-root test. This endogenous structural and fossil-fuel energy consumption as per expectation found highly significant. Gross domestic product (GDP) found to generate significant negative short-run shocks over carbon emission, however, in the long run, no such significant performance of the GDP in reducing carbon emission is observed. In the end, this study offers few policy suggestions to increase the use of natural gas fuel and other non-renewable energies in the manufacturing of merchandise exports items in India.