Research Seminar

The Carbon Footprint of Global Trade Imbalances — Hendrik Mahlkow

09 Nov 2021


Hendrik Mahlkow (Kiel Institute)


A large share of global carbon emissions arises in the production of goods that are consumed in a different country. The flow of carbon embodied in trade is highly asymmetrical. At the same time, trade is highly and persistently unbalanced in value terms, too. Prominently, the two countries with the largest net ex- and imports of carbon (China and the US) have at the same time consistently been among the countries with the largest trade surplus and deficit, respectively. We investigate the effects of global trade imbalances on carbon emissions around the world. To this end, we use a Ricardian quantitative trade model including sectoral input-output linkages, trade imbalances, and carbon emissions from fossil fuel combustion. For every individual country, the emission effect of removing its trade imbalance depends on the carbon intensities of its production and consumption patterns, as well as on its fossil resource abundance. The simultaneous removal of all global trade imbalances is found to lower world carbon emissions by by 0.62 % or 184 million tons of carbon dioxide. Out of all individual countries’ imbalances, eliminating the Qatari trade surplus and the US trade deficit would lead to the largest environmental benefits in terms of lower global emissions. 


Hendrik Mahlkow (Kiel Institute) and Joschka Wanner (University of Potsdam and Kiel Institute)


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