Impact of Trade in Environmentally Preferable Products and Clean Technologies on Economic Growth and Environmental Quality: Empirical Analysis in Developing Countries and in OECD Countries

Abstract

The aim of this paper is to estimate the indirect and the direct effects of trade in Environmentally Preferable Products and Clean Technologies (called “Class B” lists) on air quality for a number of developed and developing during the period 1996-2012 and 2005-2012 (through environmental policy and income). Empirically, the study relies on the Two-Stage Least Squares (2SLS) and Three Stage Least Squares regression analysis. For both Class B lists of preferable goods, OECD countries are encouraged to market EPP (Environmentally Preferable Products) because they have a negative overall effect on carbon emissions, which is not the case for developing countries (no effects have been identified). Trade intensity in clean technologies (CT) contributes to the reduction of CO2 emissions in the case of OECD countries. For developing countries, trade in these products does not bring any benefits to the quality of the environment, hence the importance of focusing on trade in other types of products.