World Development
Do environmental provisions in trade agreements make exports from developing countries greener?
Environmental provisions in preferential trade agreements (PTAs) are increasing in terms of their number and variety. The economic effects of these environmental provisions remain largely unclear. It is, therefore, necessary to determine whether the trend to incorporate environmental provisions in PTAs counteracts the goal to spur economic development through trade via these PTAs. This is the first article in which the trade effects of environmental provisions in PTAs are thoroughly investigated. The spotlight is put on developing countries for which the assumed trade-off between economic development and environmental protection is particularly acute. This article buses a new fine-grained dataset on a broad range of environmental provisions in 680 PTAs, combined with a panel of worldwide bilateral trade flows from 1984 to 2016. We show that environmental provisions can help reduce dirty exports and increase green exports from developing countries. This effect is particularly pronounced in developing countries with stringent environmental regulations. By investigating how environmental provisions in PTAs affect trade flows, this article contributes to the literature on the following topics: international trade and the environment; design and impacts of trade agreements; and greening the economy in developing countries. It also shows that the design of trade agreements matters. Environmental provisions can be used as targeted policy tools to promote the green transformation and to leverage synergies between the economic and environmental effects of including environmental provisions in trade agreements.
Full publication is available on: DOI 10.1016/j.worlddev.2020.104899
Contributors from our Network
Axel Berger
German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)
Dr. Axel Berger is a Senior Researcher at the German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE), Programme Transformation of Economic and Social Systems. He is heading the G20 Policy Research Group at DIE and led the T20 Task Force on Trade, Investment and Tax in 2017, 2018 and 2019. Axel holds a doctorate in political science from the University of Duisburg-Essen and a Master’s degree from the Munich Ludwig-Maximilians-University in political science, economics and modern history. He works on the design, effects and diffusion patterns of international trade and investment agreements, with a focus on emerging markets and developing countries. Other areas of current research include the effects of an international investment facilitation framework, the impact of free trade agreements on upgrading within global value chains and the role of the G20 in global governance. He teaches international political economy at the University of Bonn and regularly advises developing countries, development agencies and international organisations on trade and investment matters.
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Clara Brandi
German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)
Clara Brandi is Head of the Research Programme “Transformations of Economic and Social Systems” at the German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE). She holds a PhD from the European University Institute, a Master’s degree from the University of Oxford (MPhil in Politics) and a Master’s degree in economics from the University of Freiburg, where she received the Hayek Award. Clara Brandi works on global governance and sustainable development, with a focus in the interplay between trade and the environment, paying particular attention to developing countries and emerging markets. Her current research includes a focus on voluntary sustainability standards and the drivers and effects of including non-economic issues in international trade agreements. Clara Brandi provides policy-advice at the national and the international level. She teaches at the University of Duisburg-Essen and at the University of Bonn.
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