The impacts of international trade on global greenhouse gas emissions: A thought experiment based on a novel no-trade analysis

Trade has been substantially influencing regional economic development, environmental sustainability, and human well-being. Enabled by the decomposition analysis, pollution haven hypothesis or no-trade scenarios (NTSs), the effects of trade on global/national social-economic-environmental development have been revealed. However, major limitations (e.g., using with-trade economic structures or neglecting price differences) existed in previous studies, and thus made the previous assessments of trade's effects unsatisfactorily. This study develops a novel NTS that addresses the existing limitations, and further applies it to estimate the effect of trade on global economic development and greenhouse gas (GHG) emissions. We show that current international trade benefits the global economic growth but with a consequence of more GHG emissions compared with the NTS. The hypothetical production in small countries (e.g., Luxembourg or Japan) would be more constrained by the production factors (e.g., land) under the NTS, compared with those factor-endowment countries (e.g., the United States or India). For country-specific analysis, we find that today's developed countries would have a substantial increase in their GHG emissions of clothing- and service-related products under the NTS, whereas countries with net-export (e.g., China or Brazil) would have less GHG emissions under the NTS. Enhancing future global collaborations is vital, especially for small or resource-deficient economies, if they are to achieve the Sustainable Development Goals.

Automated summary

Trade has a significant impact on global economic development and greenhouse gas emissions, with international trade benefiting economic growth but leading to higher emissions. Small countries may face greater production constraints under a no-trade scenario, while developed countries would see an increase in emissions from clothing and service-related products. Strengthening global collaboration is crucial for achieving Sustainable Development Goals, especially for smaller economies with limited resources.