Factors driving embodied carbon in international trade: a multiregional input-output gravity model

Concerns about the effects and consequences of climate change have notably increased in recent decades. Despite large advances in the understanding of this phenomenon, further research into the determinants of gas emissions is necessary, to shed light on the responsibilities of producers and consumers, and their potential contribution to mitigation strategies. This paper studies the trajectories and determinants of carbon embodied in world trade during a period of 15 years. Our methodology relies on a multiregional input-output model, environmentally extended. Drawing on data from the World Input-Output Database, we estimate embodied emissions in bilateral flows. Then, we assess the determinants of CO2 emissions embodied in trade, combining input-output modelling with trade gravity panel data analysis. This paper offers a methodological approach that explains and quantifies the underlying factors of carbon trade, integrating the production and consumption perspectives and considering the geographical, structural and institutional context of countries.