Pollution and International Trade: Evaluation of the Turkish Case through Input-Output Analysis

Environmental impacts of international trade have been on the agenda of both academicians and policy makers in the last decades. Different aspects of the relationship between international trade and environment have been investigated by utilizing different models either for single countries or for group of countries. This study mainly aims to explore the pollution content of international trade of the Turkish economy. For this purpose input-output methodology is employed. In recent years input-output methodology is widely used in environmental issues since with this methodology both direct and indirect effects of production and consumption on the environment can be identified explicitly. Though there are alternative measures, in this study to quantify the effects of environment on international trade, “the balance of emissions terms of trade” (BETT) will be calculated. BETT mainly measures the difference of pollution embodied in exports and pollution embodied in imports. Therefore a positive BETT suggests that Turkish exports are more pollution intensive than her imports and vice versa. While trade volume has been increasing in the Turkish economy, we aim to test whether Turkey becomes a net exporter or importer of pollution. The findings of the study are also interpreted in terms of clean and dirty sectors of the Turkish economy. As pollution indicators mainly carbon dioxide emissions of fuels like coal, natural gas and oil will be calculated. Additionally, as the main data source the latest three input-output tables of the Turkish economy will be utilized.