Greening Through Trade
69 Pages Posted: 26 Sep 2024
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Abstract
We investigate the impact of environmental regulations in export destinations on firms' pollution emissions. By utilizing the passage of Permanent Normal Trade Relations by the U.S., which eliminates policy uncertainty regarding tariffs on Chinese exports, we demonstrate that exporting to highly regulated markets reduces smoke, SO2, and waste gas emissions by 0.267%, 0.239%, and 0.026%, and water and coal usage by 0.185% and 0.242%, respectively. Mechanism analysis shows that exporters adapt their practices to meet environmental requirements to participate in the global value chain. Moreover, regional spillover effects exist in cities with more export to highly regulated markets.
Keywords: Export destination, South-North trade, Pollution emission, Resource usage.
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