Abstract

Ever since the concept of global warming was introduced, individuals have been trying to find ways to measure, test, and show how decreasing levels of carbon emissions can help bring positive changes to the environment. One of the suggestions proposed was for developed countries to try and abate the carbon emissions of developing countries. This study concerns itself with the international trade of environmentally friendly technological goods, which helps abate carbon emissions, from the developed countries to the developing countries. More specifically, it is concerned with the question, ‘Do developed countries benefit by trading environmentally friendly technological goods to developing countries?’

Given the above question, this study takes the position that developed countries benefit when they engage in the international trade of green technological goods with the developing countries. It is noted that the trade of green technological goods helps the developed countries gain more from their producer surplus than they lose from their consumer surplus. In accordance with Porter and van der Linde’s claim, we see that innovating firms in developed countries operate in a competitive setting that encourages the global diffusion of green technological goods. In the presence of stringent environmental regulations, countries are encouraged to reduce their domestic carbon emissions through trade. Our analysis uses the gravity model derived from the Heckscher-Ohlin model, to test the determinants and transmission channels for which green technological goods are exported to developing countries. We find that even though environmental regulations do not directly increase trade flows, they do encourage developed and developing countries to reduce carbon emissions which thereby leads to increasing trade flows. This is consistent with my hypothesis; however we are unable to validate the existence of the environmental Kuznets’s curve.

Advisor

Burnell, James

Second Advisor

Sirbu, Anca

Department

Business Economics

Publication Date

2014

Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis

Share

COinS
 

© Copyright 2014 Varun R. Bhandari