The role of international trade on environmental efficiency: a DEA approach

Abstract

The relationship between trade and environmental conditions receives considerable attention whenever countries are in the process of negotiating trade agreements. In this paper using a non-parametric non-stochastic production frontier approach, we first develop an environmental efficiency index for a sample of high income and low and middle income countries and then examine the role of trade on the changes in environmental efficiency. The paper shows that, in addition to the per capita income which exhibits an environmental Kuznets type relationship, trade-related variables such as trade composition, the share of polluting exports and openness of a country are important determinants of environmental efficiency. © 2001 Elsevier Science B.V.