Investigation of the Relations Between Foreign Trade and Characteristics of Environmental Quality: Existing Approaches and Approbation of Gravity Modeling

Abstract

The purpose of this study is for the author to summarize approaches and methods for assessing availability, identifying forms and types of relations between characteristics of environmental quality and international trade, and also to test the gravity theory of trade as such a method (on the example of the Republic of Belarus).The author has investigated modern economic works devoted to the study of the influence of trade liberalization on environmental pollution, the pollution haven hypothesis, the environmental Kuznets curve, the Porter hypothesis, etc., as well as the studies aimed at confirming or refuting these hypotheses, has systematized modern approaches to assessing the relations between trade and environmental indicators.Based on the panel data for the period from 1995 to 2019, the author has constructed the gravity models of trade (separately for export and import) of the Republic of Belarus with the EAEU partner countries and neighboring countries (Lithuania, Latvia, Poland, Ukraine), taking into account the environmental impact (the carbon dioxide emissions as the proxy variable of pollution). The simulation results have confirmed the theoretical provisions of the gravity theory. In addition, a significant effect of an increase in carbon dioxide emissions of countries – trade partners of the Republic of Belarus on its imports has been revealed.