Opening up, international trade, and green technology progress

Green technology progress refers to the advancement of the energy-saving technology based on input factors. China's opening up policy plays an increasingly important role in its economic growth. Therefore, this study verifies the influence of opening up on the country's green technology progress. This study sets up a 2 x 2 x 2 green technology progress model with two countries (a developed country and a developing country), two goods (cleaner goods and dirty goods), and two factors (labor and capital) to analyze theoretically the influence of trade on green technology; thereafter, four propositions are developed. A method for measuring green technology progress based on inputs is developed and alternative measurement models are introduced to test the correctness of the four propositions. Since the coefficient on import trade, a key index, does not yield significant results, this study concludes that international trade affects green technology progress by changing the labor-capital ratio, as well as the research and development (R&D) cost. This study further uses this deduction to examine countries characterized by different development levels. Our final goodness-of-fit results are satisfactory. This study concludes that China can develop its domestic economy through exports, but must enhance the supervision of exporting enterprises. In addition, imports from developed countries seem to be able to improve China's green technology and, most importantly, its ability to innovate and cultivate talent. (C) 2016 Elsevier Ltd. All rights reserved.