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Economic gains and environmental losses from international trade: A decomposition of pollution intensity in China's value-added trade

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  • Duan, Yuwan
  • Yan, Bingqian

Abstract

Based on a multi-regional input-output model, this study explores the temporal changes and driving forces of China's environmental losses relative to its economic gains from international trade with each of its 45 trading partners from 1995 to 2015. We find that China suffered larger environment losses per $US value-added through exports than almost all of its trading partners. Over time, the environmental losses paid by China declined quicker than that of its bilateral trading partners. The decomposition results of our research further show that the technology effect played a dominant role in this decline. Moreover, the phenomenon that developed economies have outsourced dirty intermediate production stages to emerging economies via trade in intermediate goods, has led to the emerging economies suffering greater environmental losses over time for certain economic gains from international trade.

Suggested Citation

  • Duan, Yuwan & Yan, Bingqian, 2019. "Economic gains and environmental losses from international trade: A decomposition of pollution intensity in China's value-added trade," Energy Economics, Elsevier, vol. 83(C), pages 540-554.
  • Handle: RePEc:eee:eneeco:v:83:y:2019:i:c:p:540-554
    DOI: 10.1016/j.eneco.2019.08.002
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