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Can Global De-Carbonization Inhibit Developing Country Industrialization?

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  • Aaditya Mattoo
  • Arvind Subramanian
  • Dominique van der Mensbrugghe
  • Jianwu He

Abstract

Most economic analyses of climate change have focused on the aggregate impact on countries of mitigation actions. We depart first in disaggregating the impact by sector, focusing particularly on manufacturing output and exports. Second, we decompose the impact of a modest agreement on emissions reductions—17 percent relative to 2005 levels by 2020 for industrial countries and 17 percent relative to business-as-usual for developing countries—into three components: the change in the price of carbon due to each country's emission cuts per se; the further change in this price due to emissions tradability; and the changes due to any international transfers (private and public). Manufacturing output and exports in low carbon intensity countries such as Brazil are less affected. In contrast, in high carbon intensity countries, such as China and India, even a modest agreement depresses manufacturing output by 3–3.5 percent and manufacturing exports by 5.5–7 percent. The increase in the carbon price induced by emissions tradability hurts manufacturing output most while the real exchange rate effects of transfers hurt exports most. Copyright 2012, Oxford University Press.

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Bibliographic Info

Article provided by World Bank Group in its journal The World Bank Economic Review.

Volume (Year): 26 (2012)
Issue (Month): 2 ()
Pages: 296-319

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Handle: RePEc:oup:wbecrv:v:26:y:2012:i:2:p:296-319

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References

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  1. Raghuram G. Rajan, 2005. "Aid and Growth: What Does The Cross-Country Evidence Really Show?," Working Papers id:54, eSocialSciences.
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Cited by:
  1. Pauline Lacour & Jean-Christophe Simon, 2012. "Les avancées du Mécanisme de Développement Propre : une étape décisive vers un développement "décarboné" au Sud ?," Post-Print halshs-00713067, HAL.
  2. Valenzuela, Ernesto & Anderson, Kym, 2011. "Climate Change and Food Security to 2050: A Global Economy-wide Perspective," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 100531, Australian Agricultural and Resource Economics Society.

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