Bilateral Trade under Environmental Pressure: Balanced Growth

Feng Dai (), Songtao Wu (), Ling Liang () and Zifu Qin ()
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Songtao Wu: Zhengzhou Information Engineering University
Ling Liang: Zhengzhou Information Engineering University
Zifu Qin: Zhengzhou Information Engineering University

Journal of Industry, Competition and Trade, 2016, vol. 16, issue 2, No 4, 209-231

Abstract: Abstract Based on the advance-retreat course (ARC) model - a growth model under environmental pressure, this paper builds a bilateral import and export trade growth model under environmental pressure. By using the model, the paper analyzes the impacts of innovation on import and export growth, presents a method for computing the optimal levels of imports and exports, derives the limit values of imports and exports, and obtains the limit equilibrium between exports and imports. Finally, a strategy for promoting import and export growth and achieving a bilateral trade balance according to the limit equilibrium is designed. The findings are the following: (i) innovation growth will gradually reduce goods import and export, and services import and export will increase, (ii) the U.S. import–export structure is more reasonable than that of China, and (iii) there is big room for services import and export growth for China.

Keywords: Import–export model; Trade environmental pressure; Policy index; Bilateral trade balance; Balanced growth (search for similar items in EconPapers)
JEL-codes: C53 F43 F47 O44 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/s10842-015-0205-9

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