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Bilateral Trade under Environmental Pressure: Balanced Growth

Author

Listed:
  • Feng Dai

    (Zhengzhou Information Engineering University)

  • Songtao Wu

    (Zhengzhou Information Engineering University)

  • Ling Liang

    (Zhengzhou Information Engineering University)

  • Zifu Qin

    (Zhengzhou Information Engineering University)

Abstract

Based on the advance-retreat course (ARC) model - a growth model under environmental pressure, this paper builds a bilateral import and export trade growth model under environmental pressure. By using the model, the paper analyzes the impacts of innovation on import and export growth, presents a method for computing the optimal levels of imports and exports, derives the limit values of imports and exports, and obtains the limit equilibrium between exports and imports. Finally, a strategy for promoting import and export growth and achieving a bilateral trade balance according to the limit equilibrium is designed. The findings are the following: (i) innovation growth will gradually reduce goods import and export, and services import and export will increase, (ii) the U.S. import–export structure is more reasonable than that of China, and (iii) there is big room for services import and export growth for China.

Suggested Citation

  • Feng Dai & Songtao Wu & Ling Liang & Zifu Qin, 2016. "Bilateral Trade under Environmental Pressure: Balanced Growth," Journal of Industry, Competition and Trade, Springer, vol. 16(2), pages 209-231, June.
    • Handle: RePEc:kap:jincot:v:16:y:2016:i:2:d:10.1007_s10842-015-0205-9
    DOI: 10.1007/s10842-015-0205-9
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    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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