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Trade and sustainability: how strong are the empirical linkages between trade structures and sustainability performance?

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  • Wasutadon Nakawiroj

Abstract

This paper examines the relationship between countries' indicators of sustainability and their actual trading patterns, using a panel data approach incorporating all categories of trade in goods for a sample of 85 countries over a ten-year period. It is verified that environmental performance corresponds with lower trade-induced production pollution in numerous scenarios, while strong legal and contract enforcement discourages such trade-induced pollution in every scenario studied. It is observed that, for the global multilateral trading circle as a whole and developing countries, environmental quality at home is significantly linked with export-induced production pollution at home, as well as import-induced pollution elsewhere. For developed countries, however, environmental performance does not make much difference, whereas the rule of law remains effective in lowering pollution. On average, the aspects of environmental quality and legal enforcement are successfully transmitted into international trade, with some differences between country groups.

Suggested Citation

  • Wasutadon Nakawiroj, 2016. "Trade and sustainability: how strong are the empirical linkages between trade structures and sustainability performance?," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 9(3), pages 272-289.
    • Handle: RePEc:ids:ijepee:v:9:y:2016:i:3:p:272-289
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