Is environmental efficiency trade inducing or trade hindering?
Author
Doganay, S. M.
Sayek, S.
Taskin, F.
Date
2014Source Title
Energy Economics
Print ISSN
0140-9883
Electronic ISSN
1873-6181
Publisher
Elsevier
Volume
44
Pages
340 - 349
Language
English
Type
ArticleItem Usage Stats
131
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102
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Abstract
Global efforts to identify strategies for sustainable economic growth and development underline the need for understanding important links between environmental policies and international trade. In this paper, by constructing an environmental efficiency index for 111 countries from 1980 to 2009, we are able to empirically test for one such link. An improvement in the environmental efficiency index in terms of carbon dioxide emissions reflects a decrease in the cost of efforts to mitigate the environmental costs associated with growth. Countries that improve their environmental efficiency are found to experience strong international trade effects, both through increased exports and increased imports. While the positive link between efficiency improvements and exports is supportive of the Porter hypothesis, the positive link between efficiency improvements and imports is supportive of strong positive income effects on account of environmental efforts. These results, which are robust to alternative estimation strategies, lend strong support to global efforts to improve countries' environmental efficiencies. © 2014 Elsevier B.V.
Keywords
Environmental efficiency indexGravity model
Porter hypothesis
Carbon dioxide
Economic analysis
Global warming
International trade
Environmental efficiency
F14
F18
Gravity model
Porter hypothesis
Efficiency