The environmental effect of trade liberalization: Evidence from China's manufacturing firms |
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| Authors: | Jingbo Cui On Kit Tam Bei Wang Yan Zhang |
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| Affiliation: | 1. Division of Social Sciences and Environmental Research Center, Duke Kunshan University, Kunshan, China;2. School of Economics, Finance and Marketing, Royal Melbourne Institute of Technology (RMIT) University, Melbourne, Vic., Australia;3. School of Public Administration, University of International Business and Economics, Beijing, China;4. School of International Trade and Economics, Central University of Finance and Economics, Beijing, China |
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| Abstract: | While prior literature on trade liberalisation and the environment has mostly focused on the macroeconomic ramifications, this study explores at the firm level whether and how changes of trade barriers brought about by China's accession to the WTO may impact on its manufacturing firms’ environmental performance. Adopting a difference-in-differences (DID) methodology, we document the effects of tariff reductions on improving firm-level SO2 emission intensity, and the key corporate strategic decisions responsible for delivering the observed results, with robustness tests covering other major pollutants. In response to trade liberalisation, firms are found to increase labour resources for environmental protection and to improve their production processes to reduce emission intensity. This study contributes to the literature by investigating at the level of the operating firm how output and input tariff reductions may impact on environmental performance and uncovering for the first time the specific actions responsible for the results. |
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| Keywords: | China environmental performance SO2 emissions trade liberalisation |
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