Trade Openness VS. Environmental Gross Product

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In this paper, the importance of environmental degradation costs in national accounts is discussed, empirical studies having been considered by politician and economic planners before. The importance of a determination of relationship between economic growth VS. openness to trade is also discussed. The main objective followed in an investigation of the relationship between trade openness, green GDP, physical and human capital as based upon Granger causality and also on Jhoansen and Juselius cointegration tests. There existed a causal link between openness to trade and green GDP considering time series data as during 1350-1384. In other words, changes in the openness cause changes in the green economic growth. Moreover in this study it is attaempted to establish the long run relationship between variables as based on Solow growth model by use of Vector Autoregression model (VAR), Jhoansen - Juselius cointegration tests. The results indicate that greater openness and increase in human capital index lead to decrease in green GDP growth rate while an increase in physical capital lead to higher environmental gross product (green GDP).

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