Will Trade Protection Trigger a Surge in Investment-Related CO 2 Emissions? Evidence from Multi-Regional Input–Output Model

Mengmeng Liu, Hao Wu () and Haopeng Wang
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Mengmeng Liu: School of Economics and Management, China University of Petroleum (East China), Qingdao 266580, China
Hao Wu: School of Economics and Management, Zhejiang University of Science and Technology, Hangzhou 310023, China
Haopeng Wang: School of Economics and Management, China University of Petroleum (East China), Qingdao 266580, China

Sustainability, 2023, vol. 15, issue 13, 1-21

Abstract: Current research has revealed that global trade promotes transnational investment and contributes to large amounts of CO 2 emissions. Recently, trade protectionism has gradually emerged. This study aims to explore the effect of global trade protection on investment-related CO 2 emissions. We construct an accounting framework for investment-related CO 2 emissions under trade freedom and trade restriction based on the MRIO model for the first time, and investment-related CO 2 emissions in 16 economies are determined in both trade freedom and trade restriction scenarios. The study uses normal trade and no-trade scenarios instead of free trade and restricted trade scenarios. Then, based on the comparison of the two scenarios, the effect of global trade protection on investment-related CO 2 emissions is revealed from the three levels of country, section, and trade links. It is found that global trade protection would lead to an increase of up to 546.17 million tons in investment-related CO 2 emissions under current trade structures. Transnational investment in the trade of end-stage intermediary goods contributed 81.6% of the total effect. In terms of countries, trade protection is quite disadvantageous to CO 2 emission reduction in China and India, and their CO 2 emissions would respectively increase by 105 million tons and 141.5 million tons compared to normal trade. The electricity, gas, and water supply sectors and the manufacturing sector are the main sectors for investment-related CO 2 emissions. This study reveals the effect of trade freedom and trade protection on the environment of various countries from the viewpoint of investment-related CO 2 emissions, which has important reference value for global CO 2 emission reduction in the context of the evolving trade situation.

Keywords: CO 2 emission; transnational investment; trade protection; MRIO model (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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