Analysis of the relationship between international trade and carbon intensity of economic growth within the framework of structural elements

The trade-off between economic growth and environmental degradation is an important research topic. This study offers an alternative perspective to these debates by analyzing economic growth and carbon emissions in a composite indicator called the carbon intensity of economic growth (CIGR). The main research problem of this study is to analyze the effects of countries' institutional characteristics, the share of renewable resources in energy consumption, and production patterns and particularly their trade structures on CIGR. CIGR technically represents the pressure of economic growth on carbon emissions. The CIGR variable was calculated using carbon emissions and GDP data for the period 1995–2019 for 32 OECD countries. Countries were divided into three groups based on their GDP per capita using the Phillips & Sul (2007) club convergence test. FMOLS and Robust LS estimation methods were used to determine the effects of the variables on CIGR. The findings indicate that green trade openness reduces CIGR in low- income countries, while trade globalization increases CIGR in both low- and high-income countries. Considering the characteristics of country groups, the findings suggest that increasing the inclusion of green products in countries' trade baskets and harmonizing international trade standards are key to reducing CIGR. Furthermore, strengthening institutional structures and improving institutional quality can also contribute to this process.