How Does Green Trade Affect the Environment? Evidence from China

Huiling Liu, Heng Lei and Youcheng Zhou
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Huiling Liu: School of Economics, Huazhong University of Science and Technology, Wuhan, China
Heng Lei: School of Management, Huazhong University of Science and Technology, Wuhan, China
Youcheng Zhou: Department of Accounting, Southampton Business School, University of Southampton, Southampton, UK

Journal of Economic Analysis, 2022, vol. 1, issue 1, 1-19

Abstract: This study focuses on the impact of trade in environmental goods (green trade) on the environment. We found that green trade can decrease pollution levels by exploiting a panel of 277 Chinese cities from 2004 to 2013 and using the instrumental variable (IV) strategy. However, total trade openness is far less favorable to the environment. We also found that both green imports and exports are conducive to the Chinese environment, while ordinary green trade performs better than green processing trade. Nevertheless, the effects of green trade are restricted by a city's purchasing power and absorptive capacity, as well as the classifications of environmental goods. Furthermore, green trade mainly promotes local green technological progress to benefit the environment.

Keywords: Green trade; Environmental pollution; Green imports; Green exports; Instrumental variable (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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