Mirror, Mirror on the Wall, Where are the Best Destinations to Export? A Theoretical and Empirical Tale

Existing research that analyzes relationship between trade and environment usually applies traditional dichotomy to divide trade into export and import, paying less attention on the heterogeneity of trading partners. However, especially under the context of the current drastically changing trade environment, existing theories need to be modified to better predict the effects of trading with different partners on the environment. To better understand role of export destination in effects of exporting on emissions, our analyses establish the micro theoretical model, and then empirically investigate the foresaid issue based on the micro level data of Chinese’s enterprises. We find that exporting to different countries causes differentiating impacts on the environment. Exporting to developed and developing countries can both lead to decline in enterprise’s emission intensity; however, exporting to developed countries has a greater impact on emission intensity reduction. Besides, after exporting, increasing effect of production scale expansion on total emissions is offset by decreasing effect of improvement in productivity and increase in abatement cost. Thus, exporting to developed countries or to developing countries will not significantly change enterprise’s total emissions