Reproducibility package for Trade's Emissions Paradox: Cutting Greenhouse Gases, Raising Air Pollution

Trade’s overall impact on emissions is not straightforward. Existing literature on trade and emissions primarily focuses on countries' net export emissions, often neglecting the emissions saved by importing products instead of producing them domestically. This paper investigates the dual impact of trade on global emissions, revealing that while emissions rise when countries produce goods for export, they fall when countries import products instead of producing them domestically. The net effect of trade on global emissions is determined by the balance between these two factors. Our estimates indicate that emissions embodied in exports are significant and rising, accounting for 31 percent of annual greenhouse gas (GHG) emissions and 25 percent of annual particulate matter (PM2.5) emissions in 2021. However, considering the emissions saved through imports, trade results in a reduction of global GHG emissions by up to 2.2 percent from 2004 to 2021, as it allows countries with high emission intensity to import rather than produce domestically. This reduction is not observed in PM2.5 emissions, where trade leads to an increase of up to 1 percent. These findings highlight the discrepancy in emission intensities between exporting and importing countries, which shapes the overall impact of trade on global emissions.