Green trade or green technology? The way forward for G-7 economies to achieve COP 26 targets while making competing policy choices

Jiancheng Bai, Zhiyong Han, Syed Kumail Abbas Rizvi and Bushra Naqvi

Technological Forecasting and Social Change, 2023, vol. 191, issue C

Abstract: Making a country's Trade environmentally friendly, aka the Green Trade through environmental restrictions, has long been a popular policy choice, especially for the wealthy and trade-integrated economies. However, the effectiveness of such regulations in terms of improved environmental quality is an essential but less investigated research question. In this paper, we analyze, for G-7 countries, the environmental effects of the two competing policy choices, i.e., imposing environmental restrictions on Trade or investing in green technology and innovation, by following a rigorous econometric approach. Our results are exciting and, to some extent, contrary to mainstream ideas. We find that the increasing share of Green trade in the overall trade portfolio of G-7 countries is futile and more damaging for the environment by causing an increase in consumption-based carbon emissions. On the other hand, the role of Green technology is highly effective in reducing these emissions in the panel of G-7 countries. These results highlight the effectiveness of the two competing policy choices almost every country must make to protect the climate and stop further environmental degradation.

Keywords: Green trade; Green innovation; Consumption-based carbon emissions; G-7 economies; COP26 (search for similar items in EconPapers)
JEL-codes: O51 Q54 Q55 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:191:y:2023:i:c:s0040162523001622

DOI: 10.1016/j.techfore.2023.122477

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