The Environmental Effect Of Trade: The Model Research On The Revised Environmental Kuznets Curve

As the economic globalization and international environmental problems become more apparent during the recent decades, the two very different issues– trade and environment becomes more related than ever, and the research efforts put upon their relationship and conflicts are growing very fast. Needless to say, the trade liberalization did indeed speed up the process of technological advances and innovations, but its mysterious impact on the environment, both local and global, attracts lots of attention. Especially the fundamental questions as whether it's good or bad for the environment are raised and subsequently addressed by the researchers from the field of environmental economics.Of all the relevant theories and models, the environmental kuznets curve (EKC) theory formed in the early 1990 century is undoubtedly one of the most important. It reveals the invert"U"relationship between trade-induced income growth and environmental status. On one hand, it has become one of the most obvious evidences for us to further promote trade liberalization; on the other hand, it has solicited ever-growing suspicion and criticism after its birth. In practice, it has misled some of the countries, especially developing ones, to adopt the"first pullets, and then combats"doctrine, which undermines the sustainability of these countries. This problem has been dwelt with by researchers who subsequently revised EKC and provide constructive suggestions and advices on how to"flatten"the expected EKC in order to bring the trade-induced environmental damages to the lowest level. However, the revised EKC theory is as general and impractical as the original one, it lacks the necessary systematic structure and comprehensiveness to overcome the obstacles presented in the old theory.However, the three principles, including smooth principle, advance principle and flashback principle, proposed by this thesis, try to resolve the problem by decomposition of the current revised EKC. As the three principles vary in the perspective of intensity and timing, they provide concrete solutions to different environmental problems, which are categorized into four kinds within a 2X2 matrix model by their comparative environmental severity and expecting combating costs. In this model, different principles, different environmental problems and different pollution policies are adjusted accordingly, so that each unique set of policies guided by a corresponding principle are aimed at tackling a certain category of environmental problems. By doing so, the original static EKC are extended to be enabled to tackle various kinds of environmental problems dynamically. The traditional EKC theory can also be applied to developing countries without comprising their sustainability. Different countries can apply this model based on their unique situation by using a specific set of policies guided by a corresponding principle to tackle their problems after they have thoroughly analyzed, classified and prioritized their environmental challenges. In this way, the seemingly conflicting relation between trade and environment should be addressed in a better way and even resolved to some extent.To China, this model can be even more valuable since China's economy is growing very fast during the past over twenty years, whereas its natural resources are becoming scarcer and its environment is becoming more fragile. It is vital to ensure its sustainable development by first abandoning the false and inefficient development model. It all requires a breakthrough in thinking paradigm, which the traditional EKC theory can barely do any help. It should be noticed that the well-researched command-and-control policies and economic instruments are not sufficient anymore. The institutionalized approaches guided by smooth principle should be considered at the top of the research agenda if we should want to transform our development model and ensure a long-term sustainable development and consolidate a harmonious relationship between trade and environment. In this thesis, starting from analyzing the source of growth, the institutionalized approaches are emphasized on transforming the production and consumption pattern to a sustainable level.