Carbon Emission and Global Trade Sustainability

Abstract

Climate change is one of the greatest challenges for the earth that is mostly driven by human actions. The rapid increase of world population forces the businesses to reach the economies of scale. Digital and technological transformation of the world, thanks to “Industry 4.0,” provides new opportunities for production as well as international trade. Today, the green production process of an imported product could produce lower emissions than producing domestically. However, the greenest countries in the world are developed ones such as Denmark, Switzerland, and Austria. Furthermore, nearly half of the goods' export belongs to developing economies. This chapter focuses on the carbon dioxide (CO₂) emission of 18 countries that produce approximately 75% of the world's CO₂ emission and its determinants. The main target of the study is to investigate the impact of export on carbon emission. The convergence estimation and responsiveness scores (RSs) of countries' CO₂ emission levels are performed to find carbon emission convergent groups and the impact of emission determinants. Besides, the study divides the export of countries into broad economic categories (BEC) and evaluates the impact of capital goods, intermediate goods, and consumption goods groups over the emission. The findings demonstrate that intermediate goods export leads to 7.4% deviation of CO₂ emission whereas the effects of capital and consumption goods are neutral. To the knowledge of the authors, this is the first research discussing the BEC classification impact over the carbon emission of that 18 countries. The results help to take necessary and effective measures of supranational organizations to have a sustainable trade policy especially for the post-Covid-19 period of the world.

Citation

Tunahan, H. and Şimdi, H. (2022), "Carbon Emission and Global Trade Sustainability", Yakut, E. (Ed.) Industry 4.0 and Global Businesses, Emerald Publishing Limited, Leeds, pp. 81-93. https://doi.org/10.1108/978-1-80117-326-120211006