Has International Trade Increased Carbon Dioxide Emission in Asia?

Abstract

This chapter investigates how international trade affects pollution using annual data from 34 Asian countries for the period 1970–2019. Following the work of Antweiler, Copeland, and Taylor (2001), the authors divide the impact into three effects – scale, technique, and composition effects. The scale of economic activity drives pollution demand. The technique effect reflects increased willingness to bear the costs of abating pollution as a country gets more prosperous because of increased international trade. International trade changes the composition of output in a country and therefore the level of pollution as different goods are produced with different pollution intensities. This is called the composition effect. This chapter measures pollution using carbon dioxide emissions (metric tons per capita) obtained from the United States Energy Information Administration. This study estimates a regression model that provides estimates of the magnitudes of trade’s impact on pollution as per the aforesaid three effects. The authors find that the scale and the composition effects of pollution are positive, but the technique effect is negative, and that the net effect is negative (international trade leads to a lower level of emission) when the underlying model is linear, but it is positive (international trade leads to a higher level of emission when non-linearities are considered).

Citation

Ilechukwu, N. and Lahiri, S. (2022), "Has International Trade Increased Carbon Dioxide Emission in Asia?", Chakraborty, C. and Pal, D. (Ed.) Environmental Sustainability, Growth Trajectory and Gender: Contemporary Issues of Developing Economies, Emerald Publishing Limited, Leeds, pp. 11-22. https://doi.org/10.1108/978-1-80262-153-220221003