How do imports and exports affect green productivity? New evidence from partially linear functional-coefficient models.

Globalization and income disparities have raised an urgent need to re-examine the environmental consequences of international trade. Using a global panel dataset covering 93 economies from 1980 to 2017, this paper explores the heterogeneous impacts of international trade on green productivity. Unlike previous studies that impose strict linear assumptions on functional forms, we adopt a newly developed partially linear functional-coefficient model to estimate the specific response functions of green productivity to imports and exports at different income levels, thus emphasizing the potential role of income heterogeneity. The results demonstrate that (1) imports and exports have different non-linear effects on green productivity; (2) imports do not significantly affect green productivity in lower-income countries (relative income level is less than 0.5), but imports increasingly promote green productivity in high-income countries; (3) exports hinder green productivity in extremely low-income countries (relative income level is less than 0.1), while gradually improving green productivity in high-income countries (relative income level is larger than 0.6); and (4) imports and exports promote green productivity more significantly by technological progress rather than efficiency improvements. The stimulus effect from induced technological progress is only observed in higher-income countries.