The climate impacts and potential benefits of services export growth in developing countries

Abstract

Promoting the services trade is considered an effective means of revitalizing the economy at a marginal environmental cost in the post-pandemic era. However, the impact of services trade growth and how to promote services development remain to be addressed. This study investigates the performance of the services trade for both developed and developing countries as well as the impact of their services trade growth on the Paris Agreement climate target and the possible synergy for achieving the Sustainable Development Goals (SDGs). Moreover, policy recommendations are provided for developing countries to facilitate services trade growth. Input–output analysis, comparative advantage theory, and the Model for the Assessment of Greenhouse Gas Induced Climate Change (MAGICC) are used in this study. The results show that services trade accounted for 44.4 % of global trade-induced value added but only 14.7 % of CO2 emissions. Services trade growth would lead to 199.8 Mt and 311.2 Mt CO2 emissions under the ServGrow scenario and DoubDeve scenario, respectively, suggesting that vigorously promoting services exports growth of developing countries has limited carbon implications. Further simulation indicates that the global atmospheric temperature increase caused by services trade growth in both scenarios is within 0.05 °C. Notably, accelerating services exports growth in developing countries helps to mitigate the inequality between developed and developing countries. The findings of this study can inform policymakers regarding the formulation and implementation of policies for economic recovery, reducing inequality, addressing climate change, and contributing to the achievement of the SDGs.