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Pollution and International Trade in Services

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  • Arik Levinson

Abstract

Two central topics in recent rounds of international trade negotiations have been environmental concerns, and services trade. While each is undoubtedly important, they are unrelated. In this paper I show that the services-environment link is small, for two reasons. First, services account for only a small fraction of overall pollution. For none of five major air pollutants does the service sector account for even four percent of total emissions; for three of the five services account for less than one percent. Second, those service industries that do pollute are the least likely to be traded internationally. Those services for which the U.S. collects and publishes international trade data -- presumably those services that are traded internationally -- are less polluting than services for which trade data do not exist -- presumably because the services are not traded. Even if we limit attention to the services that are traded across borders, the service industries most intensively traded are the ones that pollute the least. The bottom line is simple. International services trade bears little relation to the environment, because services in general contribute relatively little to overall pollution, and those industries that are traded internationally are among the least polluting.

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  • Arik Levinson, 2009. "Pollution and International Trade in Services," NBER Working Papers 14936, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:14936
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    References listed on IDEAS

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    1. Arik Levinson, 2009. "Technology, International Trade, and Pollution from US Manufacturing," American Economic Review, American Economic Association, vol. 99(5), pages 2177-2192, December.
    2. Ederington Josh & Levinson Arik & Minier Jenny, 2004. "Trade Liberalization and Pollution Havens," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(2), pages 1-24, November.
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    6. Cole, Matthew A., 2004. "US environmental load displacement: examining consumption, regulations and the role of NAFTA," Ecological Economics, Elsevier, vol. 48(4), pages 439-450, April.
    7. Gamper-Rabindran, Shanti, 2006. "NAFTA and the Environment: What Can the Data Tell Us?," Economic Development and Cultural Change, University of Chicago Press, vol. 54(3), pages 605-633, April.
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    Cited by:

    1. Hu, Hui & Xie, Nan & Fang, Debin & Zhang, Xiaoling, 2018. "The role of renewable energy consumption and commercial services trade in carbon dioxide reduction: Evidence from 25 developing countries," Applied Energy, Elsevier, vol. 211(C), pages 1229-1244.
    2. Marianna Gilli & Giovanni Marin & Massimiliano Mazzanti & Francesco Nicolli, 2017. "Sustainable development and industrial development: manufacturing environmental performance, technology and consumption/production perspectives," Journal of Environmental Economics and Policy, Taylor & Francis Journals, vol. 6(2), pages 183-203, April.
    3. Sylwia Bialek & Alfons J. Weichenrieder, 2021. "Do Stringent Environmental Policies Deter FDI? M&A versus Greenfield," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 80(3), pages 603-636, November.
    4. Roberta De Santis, 2012. "Impact of Environmental Regulations on Trade in the Main EU Countries: Conflict or Synergy?," The World Economy, Wiley Blackwell, vol. 35(7), pages 799-815, July.
    5. Feng, Rui & Shen, Chen & Huang, Liangxiong & Tang, Xuan, 2022. "Does trade in services improve carbon efficiency? —Analysis based on international panel data," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    6. Letisha S. Fong & Alberto Salvo & David Taylor, 2020. "Evidence of the environmental Kuznets curve for atmospheric pollutant emissions in Southeast Asia and implications for sustainable development: A spatial econometric approach," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(5), pages 1441-1456, September.
    7. Holladay, J. Scott & Mohsin, Mohammed & Pradhan, Shreekar, 2018. "Emissions leakage, environmental policy and trade frictions," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 95-113.
    8. Hongze Liang & Xiaoli Hao, 2023. "Can Service Trade Effectively Promote Carbon Emission Reduction?—Evidence from China," Sustainability, MDPI, vol. 15(17), pages 1-23, August.
    9. Xiaoyong Qiao & Yongzhe Guo & Pengyang Zhang & Xue Chen, 2024. "Servitization of Manufacturing Industry Export Enterprises, Multinational Corporation GVC Activities and Pollution Reduction in China," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 14(1), pages 1-8.
    10. Cainelli, Giulio & Mazzanti, Massimiliano, 2013. "Environmental innovations in services: Manufacturing–services integration and policy transmissions," Research Policy, Elsevier, vol. 42(9), pages 1595-1604.
    11. Holladay, J. Scott & Mohsin, Mohammed & Pradhan, Shreekar, 2016. "Emissions Leakage, Environmental Policy and Trade Frictions," Conference papers 332677, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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    More about this item

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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