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Efficiency, equity, and environmental implications of trade liberalization: A computable general equilibrium analysis

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  • Donna Lee
  • Jian Zhang

Abstract

This paper evaluates the effect of trade liberalization on global efficiency, equity, and the environment using global welfare, welfare redistribution, and carbon emission as indicators. A static, computable general equilibrium trade model with explicit representation of agricultural production and energy use is used to simulate a series of new scenarios in which 1997 baseline import tax and export subsidy trade barrier equivalents are scaled back. Findings indicate that with trade liberalization agricultural output declines, energy use increases, and carbon emissions rise. Global welfare rises revealing an overall increase in efficiency; however, gains to poorer nations come at the expense of richer nations. An increase in the use of polluting inputs such as coal in developing countries suggests poorer nations will risk environmental degradation with the lowering of trade barriers.

Suggested Citation

  • Donna Lee & Jian Zhang, 2009. "Efficiency, equity, and environmental implications of trade liberalization: A computable general equilibrium analysis," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 18(3), pages 347-371.
    • Handle: RePEc:taf:jitecd:v:18:y:2009:i:3:p:347-371
    DOI: 10.1080/09638190902986504
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    Citations

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    Cited by:

    1. Debashis Chakraborty & Sacchidananda Mukherjee, 2013. "Do Trade and Investment Flows Lead to Higher CO2 Emissions? Some Panel Estimation Results," Working Papers 1321, Indian Institute of Foreign Trade.
    2. Jámbor, Attila & Balogh, Jeremiás Máté, 2020. "Az agrárkereskedelem környezeti hatásainak vizsgálata szisztematikus szakirodalmi áttekintés segítségével [Investigating environmental effects of agricultural trade through a systematic review of t," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 930-949.
    3. Jeremiás Máté Balogh & Attila Jámbor, 2020. "The Environmental Impacts of Agricultural Trade: A Systematic Literature Review," Sustainability, MDPI, vol. 12(3), pages 1-16, February.
    4. Mao, Rui & Liu, Yuhang & Wang, Xiaoxi, 2023. "Economic and environmental impacts of agricultural non-tariff measures: evidence based on ad valorem equivalent estimates," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 26(3), January.
    5. Panxian Wang & Zimeng Ren & Guanghua Qiao, 2023. "How Does Agricultural Trade Liberalization Have Environmental Impacts? Evidence from a Literature Review," Sustainability, MDPI, vol. 15(12), pages 1-18, June.
    6. Altanshagai Batmunkh & Agus Dwi Nugroho & Maria Fekete-Farkas & Zoltan Lakner, 2022. "Global Challenges and Responses: Agriculture, Economic Globalization, and Environmental Sustainability in Central Asia," Sustainability, MDPI, vol. 14(4), pages 1-21, February.

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