Does trade in services improve carbon efficiency? —Analysis based on international panel data

Abstract

• A combination of the slacks-based measure model under the variable return to scale assumption and the Global Malmquist–Luenberger index were used to measure carbon efficiency. • Panel data from 55 countries for 2001–2015 was used to empirically test the relationship between trade in services and carbon efficiency. • Trade in services significantly improved carbon efficiency. Specifically, an increase of 1% in total trade in services increased the carbon efficiency index by approximately 0.00194 units. • The improvement in carbon efficiency as a result of trade in services was greater in exports, and imported services had an inhibitory effect on carbon efficiency. • Following a change in national leader, the financial crisis in 2008, and the signing of the Kyoto Protocol, trade in services had a greater promotional effect on carbon efficiency. Trade in services has become an important driving force of high-quality and low-carbon growth in the global economy. Existing literature has largely focused on carbon efficiency from the perspective of trade in (final or intermediate) goods, but this study is one of the first to use data from multiple countries to investigate the theoretical and empirical impacts of trade in services on carbon efficiency. Taking into consideration the factors of market size, technological innovation and structural adjustments, this study discusses the impact of import and export trade in services on carbon efficiency. Using a carbon efficiency index calculated with the slacks-based measure model under the variable return to scale assumption in combination with the Global Malmquist–Luenberger index, panel data from 55 countries around the world from 2001 to 2015 was used to empirically test the relationship. The following results were found: trade in services significantly improved carbon efficiency; other conditions being equal, an increase of 1% in total trade in services increased the carbon efficiency index by approximately 0.00194 units; the improvement in carbon efficiency as a result of trade in services was greater in exports; and imported services had an inhibitory effect on carbon efficiency. These results are robust and remain after accounting for endogenous issues. Further tests showed that service exports had a positive effect on carbon efficiency in different countries and industries, and imported services had different effects in each direction in different countries and different industries. In addition, following a change in national leader, the financial crisis in 2008, and the signing of the Kyoto Protocol, trade in services had a greater promotional effect on carbon efficiency. This article can serve as a theoretical reference on optimizing global trade in services and improving carbon efficiency.