Investigating the Impacts of Trade and Political Variables on Environmental Performance Index: A Dynaminc Panel Analysis

The main object of this article is to investigate the impacts of trade and political variables on the environmental performance index (EPI) from 2000 to 2012. To do so, the data from 110 countries were collected in this period using the GMM method. Also, different levels of income were used for data analysis. The results showed that, while the export of goods had a negative impact on EPI, the export of services and inward FDI had a positive impact on EPI in all the studied countries. The result also suggested that there was a positive relationship between political variables and EPI, with the trade and FDI having a significant impact on FDI. Furthermore, the EKC hypothesis was confirmed. These findings can be used by policymakers to attain sustainable development objectives.