Impact of Trade in Class-A Environmental Products on Economic Growth and Environmental Quality

Abstract

Openness to international trade enables several countries to access different markets. Similarly, the orientation of industrial productions towards ecological goods reinforces commercial activities and contributes to the improvement of environmental quality. The aim of this chapter is to estimate the indirect and the direct effects of trade in what the authors call “Class A” environmental goods on air quality for a number of developing during the period 2005-2015 (through environmental policy and income). Empirically, the study relies on the two-stage least squares (2SLS) and three-stage least squares regression analyses. For end-of-pipe (EOP) products in developing countries, neither direct nor indirect effects are identified on the reduction of pollution. For clean technologies and products, we can observe a global positive effect resulting from two positive indirect effects via environmental policy and income. In developing countries, it seems that trade in clean technologies and products (CTP) and in the OA product list generates an intensification of pollution through an increase in wealth and the adoption of a strict environmental policy (based on taxation).