Abstract
Trade has been substantially influencing regional economic development, environmental sustainability, and human well-being. Enabled by the decomposition analysis, pollution haven hypothesis or “no-trade” scenarios (NTSs), the effects of trade on global/national social-economic-environmental development have been revealed. However, major limitations (e.g., using with-trade economic structures or neglecting price differences) existed in previous studies, and thus made the previous assessments of trade's effects unsatisfactorily. This study develops a novel NTS that addresses the existing limitations, and further applies it to estimate the effect of trade on global economic development and greenhouse gas (GHG) emissions. We show that current international trade benefits the global economic growth but with a consequence of more GHG emissions compared with the NTS. The hypothetical production in small countries (e.g., Luxembourg or Japan) would be more constrained by the production factors (e.g., land) under the NTS, compared with those factor-endowment countries (e.g., the United States or India). For country-specific analysis, we find that today's developed countries would have a substantial increase in their GHG emissions of clothing- and service-related products under the NTS, whereas countries with net-export (e.g., China or Brazil) would have less GHG emissions under the NTS. Enhancing future global collaborations is vital, especially for small or resource-deficient economies, if they are to achieve the Sustainable Development Goals.
Highlights
Trade has been substantially influencing regional economic devel opment, environmental sustainability, and human well-being (Acquaye et al, 2017; Blanco and Razzaque, 2009; Steen-Olsen et al, 2012; Xu et al, 2020)
Current international trade benefits the global economic growth but with a consequence of more greenhouse gas (GHG) emissions compared with the no-trade scenario (NTS)
For the year 2015, the global gross domestic product (GDP) would decrease by $7 trillion US dollars under the NTS, while the global total GHG emissions would decrease by 895 Mt
Summary
Trade has been substantially influencing regional economic devel opment, environmental sustainability, and human well-being (Acquaye et al, 2017; Blanco and Razzaque, 2009; Steen-Olsen et al, 2012; Xu et al, 2020). Understanding the effects of trade on global or national environmental performances is essential for this world towards sustainable development (Hoekstra and Wiedmann, 2014; Kander et al, 2015; Le Quere et al, 2019; Xu et al, 2020) In this context, consumption-based accounting or “footprinting” relying on the multi-regional input-output (MRIO) model has proven its values in capturing the supply chain-wide environmental pressures of annual-based inputs. Researchers have further traced the resource demands and emissions of final goods and services, and revealed a geographical shift of environmental pressures generally from developed to developing countries like China or India (Feng et al, 2013; Meng et al, 2018; Mi et al, 2017; Wiedmann and Lenzen, 2018) This geographical shift of environmental pressures led scholars to explore the impacts of trade on regional environmental performances.
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