Environ-economic balance analysis in bilateral industrial trade: a comparison between Australia and China
Abstract
Exchanges of products and services in bilateral industries may be accompanied by environmental and economic inequalities which lead to imbalanced situations in relation to environmental protection and economic development. In a close trade relationship between two countries such as Australia and China, their industries inevitably affect each other. This study maps the embodied CO2 emissions and value added in bilateral trade under the input–output model and measures the unequal exchanges in such trade using an originally established industrial environ-economic balance index. The bilateral trade between Australia and China is taken as an example to validate the outcomes of the research method. The results indicate that in 2014, Australia transferred 580.90 billion tons of CO2 and 105.85 billion USD of value added to China, while approximately 375.65 billion tons of CO2 and 25.15 billion USD of value added flowed from China to Australia. China’s manufacturing, construction, and services and other industries, and China’s and Australia’s real estate activities industries had net inflows of embodied CO2 emissions and value added, indicating these industries paid economic costs in return for reducing environmental pressure. In inter-industrial trade between Australia and China, 49 pairs of bilateral industrial trades were relatively fairly balanced, while the remaining 15 pairs of inter-industrial trades were imbalanced. The established environ-economic balance analysis method and quantitative findings are valuable for better understanding the environment impacts of the economic development of national economies and developing national policies in corresponding to the rising environmental issues.
Keyword : bilateral industrial trade, economic development, industrial environ-economic balance index, input–output model
How to Cite
Gao, Q., Liu, B., Li, J., Liu, C., & Xu, Y. (2022). Environ-economic balance analysis in bilateral industrial trade: a comparison between Australia and China. Technological and Economic Development of Economy, 28(3), 676–693. https://doi.org/10.3846/tede.2022.16575
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Ali, Y. (2015). Measuring CO2 emission linkages with the hypothetical extraction method (HEM). Ecological Indicators, 54, 171–183. https://doi.org/10.1016/j.ecolind.2015.02.021
Arce, G., López, L. A., & Guan, D. (2016). Carbon emissions embodied in international trade: The post-China era. Applied Energy, 184, 1063–1072. https://doi.org/10.1016/j.apenergy.2016.05.084
Dietzenbacher, E., & Los, B. (1998). Structural decomposition techniques: Sense and sensitivity. Economic Systems Research, 10(4), 307–323. https://doi.org/10.1080/09535319800000023
Du, H., Chen, Z., Peng, B., Southworth, F., Ma, S., & Wang, Y. (2019). What drives CO2 emissions from the transport sector? A linkage analysis. Energy, 175, 195–204. https://doi.org/10.1016/j.energy.2019.03.052
Gao, Q., Liu, B., Sun, J., Liu, C., & Xu, Y. (2022). Trade decomposition of CO2 emissions of global construction industries. Engineering, Construction and Architectural Management, 29(1), 502–522. https://doi.org/10.1108/ECAM-09-2020-0703
Jayanthakumaran, K., & Liu, Y. (2016). Bi-lateral CO2 emissions embodied in Australia–China trade. Energy Policy, 92, 205–213. https://doi.org/10.1016/j.enpol.2016.02.011
Lapinskienė, G., Tvaronavičienė, M., & Vaitkus, P. (2014). Greenhouse gases emissions and economic growth – evidence substantiating the presence of environmental Kuznets curve in the EU. Technological and Economic Development of Economy, 20(1), 65–78. https://doi.org/10.3846/20294913.2014.881434
Liobikienė, G., Mandravickaitė, J., Krepštulienė, D., Bernatonienė, J., & Savickas, A. (2017). Lithuanian achievements in terms of CO2 emissions based on production side in the context of the EU-27. Technological and Economic Development of Economy, 23(3), 483–503. https://doi.org/10.3846/20294913.2015.1056278
Nansai, K., Tohno, S., Chatani, S., Kanemoto, K., Kurogi, M., Fujii, Y., Kagawa, S., Kondo,Y., Nagashima, F., Takayanagi, W., & Lenzen, M. (2020). Affluent countries inflict inequitable mortality and economic loss on Asia via PM2.5 emissions. Environment International, 134, 105238. https://doi.org/10.1016/j.envint.2019.105238
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Peters, G. P., & Hertwich, E. G. (2008). CO2 embodied in international trade with implications for global climate policy. Environmental Science and Technology, 42(5), 1401–1407. https://doi.org/10.1021/es072023k
Piaggio, M., Alcantara, V., & Padilla, E. (2014). Greenhouse gas emissions and economic structure in Uruguay. Economic System Research, 26(2), 155–176. https://doi.org/10.1080/09535314.2013.869559
Sajid, M., Gao, Q., & Kang, W. (2019). Transport sector carbon linkages of EU’s top seven emitters. Transportation Policy, 80, 24–38. https://doi.org/10.1016/j.tranpol.2019.05.002
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Su, B., & Ang, B. W. (2011). Multi-region input–output analysis of CO2 emissions embodied in trade: The feedback effects. Ecological Economics, 71, 42–53. https://doi.org/10.1016/j.ecolecon.2011.08.024
Su, B., & Ang, B. W. (2017). Multiplicative structural decomposition analysis of aggregate embodied energy and emission intensities. Energy Economics, 65, 137–147. https://doi.org/10.1016/j.eneco.2017.05.002
Su, B., & Ang, B. W. (2020). Demand contributors and driving factors of Singapore’s aggregate carbon intensities. Energy Policy, 146, 111817. https://doi.org/10.1016/j.enpol.2020.111817
Su, B., Ang, B. W., & Li, Y. (2019). Structural path and decomposition analysis of aggregate embodied energy and emission intensities. Energy Economics, 83, 345–360. https://doi.org/10.1016/j.eneco.2019.07.020
Su, B., Ang, B. W., & Liu, Y. (2021). Multi-region input–output analysis of embodied emissions and intensities: Spatial aggregation by linking regional and global datasets. Journal of Cleaner Production, 313, 127894. https://doi.org/10.1016/j.jclepro.2021.127894
Su, B., Huang, H. C., Ang, B. W., & Zhou, P. (2010). Input–output analysis of CO2 emissions embodied in trade: The effects of sector aggregation. Energy Economics, 32(1), 166–175. https://doi.org/10.1016/j.eneco.2009.07.010
Sun, C., Chen, L., & Xu, Y. (2020). Industrial linkage of embodied CO2 emissions: Evidence based on an absolute weighted measurement method. Resources, Conservation and Recycling, 160, 104892. https://doi.org/10.1016/j.resconrec.2020.104892
Temurshoev, U., & Oosterhaven, J. (2014). Analytical and empirical comparison of policy-relevant key sector measures. Spatial Economic Analysis, 9(3), 284–308. https://doi.org/10.1080/17421772.2014.930168
Timmer, M. P., Dietzenbacher, E., Los, B., Stehrer, R., & de Vries, G. J. (2015). An illustrated user guide to the World Input–Output Database: The case of global automotive production. Review of International Economics, 23(3), 575–605. https://doi.org/10.1111/roie.12178
United Nations. (2008). International Standard Industrial Classification of All Economic Activities (ISIC) (Statistical papers Series M No. 4/Rev. 4). United Nations.
van der Zwaan, B., Kober, T., Longa, F. D., van der Laan, A., & Kramer, G. J. (2018). An integrated assessment of pathways for low-carbon development in Africa. Energy Policy, 117, 387–395. https://doi.org/10.1016/j.enpol.2018.03.017
Wang, S., Zhao, Y., & Wiedmann, T. (2019). Carbon emissions embodied in China–Australia trade:
A scenario analysis based on input–output analysis and panel regression models. Journal of Cleaner Production, 220, 721–731. https://doi.org/10.1016/j.jclepro.2019.02.071
Wang, Y., Wang, W., Mao, G., Cai, H., Zuo, J., Wang, L., & Zhao, P. (2013). Industrial CO2 emissions in China based on the hypothetical extraction method: Linkage analysis. Energy Policy, 62, 1238–1244. https://doi.org/10.1016/j.enpol.2013.06.045
Wang, Z., Su, B., Xie, R., & Long, H. (2020). China’s aggregate embodied CO2 emission intensity from 2007 to 2012: A multi-region multiplicative structural decomposition analysis. Energy Economics, 85, 104568. https://doi.org/10.1016/j.eneco.2019.104568
Xu, X., Wang, Q., Ran, C., & Mu, M. (2021). Is burden responsibility more effective? A value-added method for tracing worldwide carbon emissions. Ecological Economics, 181, 106889. https://doi.org/10.1016/j.ecolecon.2020.106889
Yang, X., & Su, B. (2019). Impacts of international export on global and regional carbon intensity. Applied Energy, 253, 113552. https://doi.org/10.1016/j.apenergy.2019.113552
Yuan, J., Xie, H., Yang, D., Xiahou, X., Skibniewski, M. J., & Huang, W. (2020). Strategy formulation for the sustainable development of smart cities: A case study of Nanjing, China. International Journal of Strategic Property Management, 24(6), 379–399. https://doi.org/10.3846/ijspm.2020.13345
Zafirakis, D., Chalvatzis, K., & Baiocchi, G. (2015). Embodied CO2 emissions and cross-border electricity trade in Europe: Rebalancing burden sharing with energy storage. Applied Energy, 143, 283–300. https://doi.org/10.1016/j.apenergy.2014.12.054
Zhang, W., Liu, Y., Feng, K., Hubacek, K., Wang, J., Liu, M., Jiang, L., Jiang, H., Liu, N., Zhang, P., Zhou, Y. & Bi, J. (2018a). Revealing environmental inequality hidden in China’s inter-regional trade. Environmental Science and Technology, 52(13), 7171–7181. https://doi.org/10.1021/acs.est.8b00009
Zhang, W., Wang, F., Hubacek, K., Liu, Y., Wang, J., Feng, K., Jiang, L., Jiang, H., Zhang, B. & Bi, J. (2018b). Unequal exchange of air pollution and economic benefits embodied in China’s exports. Environmental Science and Technology, 52(7), 3888–3898. https://doi.org/10.1021/acs.est.7b05651
Zhu, B., Su, B., & Li, Y. (2018). Input–output and structural decomposition analysis of India’s carbon emissions and intensity, 2007/08 – 2013/14. Applied Energy, 230, 1545–1556. https://doi.org/10.1016/j.apenergy.2018.09.026
Zhu, B., Su, B., Li, Y., & Ng, T. S. (2020). Embodied energy and intensity in China’s (normal and processing) exports and their driving forces, 2005–2015. Energy Economics, 91, 104911. https://doi.org/10.1016/j.eneco.2020.104911