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Abstract
This paper constructs a comparative analysis framework on how the input-output (IO) model with technical differences affects the calculation of the pollution terms of trade (PTT) and the tests of the pollution haven hypothesis. Specifically, the CO2 terms of trade (CTT) of the world's major economies are calculated based on five IO models, and chain additive structure decomposition analysis (SDA) is conducted to examine the roles of different factors in the changes in CTT. The economic phenomena reflected by the CTT measured by these IO models are found to be different, and a comparative analysis shows that different IO models are suitable for studying different economic problems. Suggestions are provided on the application of different IO models in the calculation of economic indicators and the study of economic issues. Policy makers need to be cautious about policy recommendations based on the results obtained from different IO models.
Acknowledgements
The authors are indebted to the Editor Michael L. Lahr and the anonymous reviewers for providing useful comments on earlier versions. The usual disclaimer applies.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 The PHH was first proposed by Copeland and Taylor (Citation1994) when studying the relationship between North and South trade and environment. Because PHH involves so many factors, the international academic community has not formed a consensus view when verifying PHH, and some research views are even completely opposite to the conclusion (Taylor, Citation2005).
2 In addition, we can clearly reveal that the possible source of the difference in their results is mainly due to the different IO models they use. The former uses SRIO model, while the latter uses MRIO model.
3 Production technology is reflected by the pollution emission intensity and the domestic intermediate input structure coefficient.
4 Grossman and Krueger (Citation1991) first proposed to decompose the environmental effects of international trade into scale, production technology, and trade structure effects.
5 Drawing on the EEBT approach defined by Su and Ang (Citation2011), we consider that the EEBT approach applies the SRIO model to each economy (Peters & Hertwich, Citation2008).
8 According to the national classification of ‘World Economic Situation and Prospects 2022,' this paper divides the 43 economies in WIOD into 8 developing and 35 developed countries (see the attachment for details). It is worth mentioning that in July 2021, the United Nations Conference on Trade and Development officially approved Korea (KOR) as a developed country.
10 Except for China Taiwan, each economy's per capita GDP data comes from the World Bank database (2010 constant price USD). The per capita GDP of China Taiwan comes from the China Statistical Yearbook and the author's calculations.
11 Although measuring CTT under the five IO models for each economy from 2000 to 2014, this paper only shows the results of the five IO models in 2000 and in 2014 due to space limitations.
9 As in Section 3.2, this section selects four representative countries for discussion. However, comparing the phased changes, the direction changes of CTT(EEBT) and CTT(MRIO) for the USA and Russia have always been the same year by year during 2000–2014. For this reason, this section only selects China and the UK.