Trade of environmental versus non-environmental goods and carbon emissions in high and middle-income countries

Abstract

The environmental goods and services industry consists of the activities that generate products and services to monitor, avoid, restrict, reduce, or repair environmental risk and decrease non-renewable energy resource usage. Although the environmental goods industry does not exist in many countries, mainly developing countries, through international trade, its impacts are reaching developing countries. This study examines the impact of environmental and non-environmental goods trade on emissions in high and middle-income countries. For empirical estimation, the panel ARDL model is applied using the data from 2007 to 2020. The results indicate that importing environmental goods decreases emissions while imports of non-environmental goods increase the emissions in high-income countries in the long run. It is found that imports of environmental goods in developing countries decrease emissions in both the short and long run. However, in the short run, the imports of non-environmental goods in developing countries have an insignificant impact on emissions.

Keywords: Emissions; Environmental goods; High and middle–income countries; Non-environmental goods.