Trade liberalization, oil shocks and environmental quality: a case study of oil exporting and importing countries

Given the role of the environment and free trade in achieving sustainable development in recent years, in this study, we survey the effect of trade liberalization on the quality of the environment. In simple words, the removal or reduction of trade barriers in international trade is trade liberalization. At the same time, oil is a factor that has a direct impact on the prices of goods and services and the trade flow, and is one of the factors affecting on air pollution the oil exporting and importing countries. Because oil is important in environment-related issues, this paper studied the effect of oil price shocks on the quality of the environment. To achieve this goal, we used panel data methods and collected data for 1980-2013. The results show that both trade liberalization and oil shocks have a significant and negative effect on environmental pollution and carbon dioxide levels in the air. Countries can achieve a high quality of the environment and sustainable development through trade liberalization measures. Given that most shocks led to increase oil prices, so countries with low consumption and alternative clean energy can reduce environmental pollution.