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Green trade or green technology? The way forward for G-7 economies to achieve COP 26 targets while making competing policy choices

Author

Listed:
  • Bai, Jiancheng
  • Han, Zhiyong
  • Rizvi, Syed Kumail Abbas
  • Naqvi, Bushra

Abstract

Making a country's Trade environmentally friendly, aka the Green Trade through environmental restrictions, has long been a popular policy choice, especially for the wealthy and trade-integrated economies. However, the effectiveness of such regulations in terms of improved environmental quality is an essential but less investigated research question. In this paper, we analyze, for G-7 countries, the environmental effects of the two competing policy choices, i.e., imposing environmental restrictions on Trade or investing in green technology and innovation, by following a rigorous econometric approach. Our results are exciting and, to some extent, contrary to mainstream ideas. We find that the increasing share of Green trade in the overall trade portfolio of G-7 countries is futile and more damaging for the environment by causing an increase in consumption-based carbon emissions. On the other hand, the role of Green technology is highly effective in reducing these emissions in the panel of G-7 countries. These results highlight the effectiveness of the two competing policy choices almost every country must make to protect the climate and stop further environmental degradation.

Suggested Citation

  • Bai, Jiancheng & Han, Zhiyong & Rizvi, Syed Kumail Abbas & Naqvi, Bushra, 2023. "Green trade or green technology? The way forward for G-7 economies to achieve COP 26 targets while making competing policy choices," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    • Handle: RePEc:eee:tefoso:v:191:y:2023:i:c:s0040162523001622
    DOI: 10.1016/j.techfore.2023.122477
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    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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