Trade openness and vulnerability to climate change: empirical evidence from 156 countries

Abstract

The objective of this article is to analyse the effect of trade openness on vulnerability to climate change (CC). An econometric analysis based on panel fixed effects egressions is carried out across 156 countries for the period 1995-2019. Empirical evidence, shows that: (i) trade openness evaluated from the Squalli and Wilson index reduces vulnerability to CC based on the “Global Adaptation Index 2020”; (ii) The underlying effect is more pronounced in low-income countries, compared to middle and high income countries. The results are robust to traditional measures of trade openness (trade openness rate, export and import) and to alternative estimation methods such as Tobit regressions, dynamic fixed effects, quantile regression and the generalized moments method. Policy implications are discussed, including the need for developing countries to strengthen their economic, social, and governance systems to enhance their resilience facing CC through trade.