From Trade to Green Growth: Investigating the Impacts of Trade, GDP, FDI and Renewable Energy on Singapore’s Environmental Performance

BRICS Journal of Economics. 2026. Vol. 7. No. 2. P. 185–209.

This study provides an empirical analysis of the relationship between trade and the environment in Singapore. It offers valuable insights into reconciling economic growth and environmental sustainability in this globally significant trade center and contributes significantly to policy formulation for trade-oriented economies. The paper examines empirical trends in trade openness, foreign direct investment (FDI), economic growth, sectoral contributions (agriculture, industry and services), and renewable energy and CO₂ emissions in Singapore from 1991 to 2024. To consider both linear and non-linear dynamics, a multi-model approach is used which includes fully modified ordinary least squares (FMOLS), canonical co-integrating regression (CCR), autoregressive distributed lag (ARDL) and non-linear (NARDL). The findings show that there is a positive link between total trade, foreign direct investment (FDI) and CO₂ emissions. Meanwhile, trade in commodities, renewable energy and the services sector are linked to negative effects, with industry showing the greatest positive impact on emissions. These asymmetric effects suggest different responses to economic shocks, with policy implications focusing on the expanded application of renewable energy, greater regulation of energy intensive industries and the strategic use of Singapore’s institutional strengths to promote sustainable trade practices. It is concluded that narrowing the gap between urbanization and trade structure is a strategic approach to achieving economic prosperity and meeting the goal of global sustainable development.

Keywords: Singapore, international trade, ASEAN, Green growth, FDI, Environmental performance, carbon emissions, CO2, Renewable energy consumption, Economic growth, ARDL model, NARDL, CCR, FMOLS, fully modified ordinary least squares