Investigating the Relationship between Trade and Financial Openness with Ecological Footprint

The major aim of this paper is the survey of impact of trade and financial openness on ecological footprint in selected developing countries. In this paper, it has been tried to test the effect of trade and financial openness on ecological footprint in the form of simultaneous-equation system on the base of panel data to the years from 1994 to 2014. The results show, there are several factors, which can affect the trade and financial openness and cannot be considered as exogenous variables. Considering trade and financial openness as endogenous variables and the factors influencing them, the impact of such variables on the ecological footprint index can be examined more precisely. On this basis, trade openness has positive and significant effect on ecological footprint index (negative effect on environment quality). On the other hand, according to shelter of pollution hypothesis financial openness variable has positive and significant effect on the ecological footprint index.