Exploring the Impact of Trading Green Products on the Environment: Introducing the Green Openness Index

Environmental degradation has constantly increased over the years, and has become one of the main contributors to climate change. For this reason, researchers are increasingly on the lookout for parameters that positively impact environmental quality. Green Products are widely accepted as one of the vital tools to minimize the environmental degradation. This paper introduces a new index which is called the Green Openness Index. The index represents the importance of Green Products in a region by means of a measure of trade in Green Products. This new index revisits the trade-environment nexus in a case study of 31 Economic Co-operation and Development (OECD) countries over the period 2007-2017. The empirical findings provide evidence that Environmental Kuznets Curve hypothesis is valid, by means of Fully modified and Dynamic Ordinary Least Squares regression analysis. As such, the new index also opens up a wide span of opportunities for future research, as the index can be used as explanatory variable in numerous different research questions and fields of research. Additionally, the results demonstrate that the presence of Green Products in trade reduces a country’s ecological footprint. This is essential information for practitioners and policy makers involved in the design of sustainable development policies.