Abstract
With the continuous development of the global economy, global energy resources have been severely consumed in the past few decades. Under this situation, can trade play a positive role in optimizing the allocation of resources and help to solve the global energy problem? This topic is extremely important for promoting the sustainable development of global economy. However, up to now, little is known about the relationship between trade and energy consumption in production. This paper establishes a trade model at the firm-level to analyze the impacts of export on firms’ energy efficiency in production. Our model shows that export can lead to the increase of firms’ energy efficiency. We also propose a novel mechanism of innovation investment to explain why export affects firms’ environmental performance. Export can stimulate firms to invest more in innovation, and thereby improving firms’ energy efficiency, which implies that trade liberalization is beneficial to the improvement of firms’ environmental performance. These findings in our theoretical model can be applied to different industries and different countries. Altogether, this paper is the first theoretical analysis to study the impacts of export on firms’ energy efficiency, having important policy implications on promoting sustainable development of the global economy.
Published Version
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