Internalization Of Environmental Costs And Its Effects On The International Trade

Since the 21st century, there has been dramatic development in the industrial economy and foreign trade in China.The gross industrial production is growing to a new record and the trade surplus is growing, but it also has brought about tremendous environmental issues, trade and environment conflicts continue to increase.This paper established the industry's environmental costing theoretical system .In this paper, the main conclusions and research can be divided into the following four aspects.It summarized the literature of environmental costs.In this way, it proposed the theoretical basis: external theory, value theory, the theory of sustainable development, the total cost of theories and the enterprise functions in the social responsibility.In the end, it showed all the logical link among these theories.It made actual classifying to environmental costs from the industry point, which can be used for the settlement of international trade and environmental conflicts.The article divided the environmental costs into the four categories:the environment consumption costs, the environmental damage costs, the maintenance costs and the environmental costs.In the measurement, according to the classification, it proposed amendment and quantitative methods of the environmental costs.It constructed the internalization of environmental costs in the measurement architecture, which provided a viable approach to the environmental costs measurement for the industry.The paper accounted the environmental costs of the textile industry in 1996-2005 and the textile export sector in accordance with the consumption factor. The results showed that the environmental cost of the textile industry was rising.The paper analysised the effect of international trade after internalization environmental costs. Internalization of environmental costs had an important impact on international trade theory, practice and trade policies.The first, the paper analysised the impact of international trade theory though the Economic Analysis.Then it summed up the impact of the internalization of environmental costs on international trade flows and the trade structure though the example.Finally, it adopted an econometric approach on the internalization of environmental costs on international competitiveness. specifically through the unit root test, ADF test, cointegration relationship analysis and the Granger causality test.It concluded that exports increased the expansion of the scale of environmental pollution emissions.The second step created an multiple linear regression model, which validated that the impact of the environmental costs on the competitiveness in international trade is negative, that is, the greater the environmental cost the smaller the competitiveness in international trade.