The Effect of Trade Expansion and Economic Growth on Environmental Quality in Iran

The effect of economic growth and free trade on environment and transnational pollutions is one of the most important current discussions in the field of environmental economics. Nowadays، the economics، social and developmental consequences of the climatic changes around the world is increasingly accepted and approved. In fact، the environment is considered as one of the key elements for sustainable development. In this regard، attempts are done to design the development process such that the nature system does not lose its equilibrium dynamism، besides maximizing the value added of economic activities. The objective of the present study is to investigate the relationship between the trade expansion and economic growth with the quality of the Iranian environment (where the air pollution has been considered here) to help authorities to take effective and efficient policies in environment section، considering the short-term and long-term effects، using the time-series data as well as VAR and VECM models during 1991Q1 to 2010Q4. The results suggest that there is a long-term relationship between trade openness، GDP، urban population، energy consumption and air pollution index. In the short-term، urban population and energy consumption variables had the highest effectiveness on SO2 production. Finally، in the long term، per capita energy consumption had the greatest impact on SO2 pollution.