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GTAP Resources: Resource Display

GTAP Resource #6283

"The long-term effects of regional trading hubs and reshoring on environmental pressure in light of Covid-19"
by Dellink, Rob


Abstract
Recent events, including the Covid-19 pandemic and increased interest in more circular economies, imply an increased pressure to reduce global value chains. In this paper, a global dynamic CGE model is used to assess the consequences of reduced global trade and reshoring, in combination with a detailed assessment of the implications of the Covid-19 pandemic and recovery. The consequences of the Covid response measures and of regional trading shifts on sectoral and regional economic activity are linked to the consequences on regional and global emissions of greenhouse gases, air pollutants, the use of raw materials and plastics consumption and waste until 2035.
The scenario analysis clearly shows a short-term reduction in all environmental pressures considered in this paper as a result of the Covid-19 pandemic. But while the strength of this reduction fades over time, there are persistent effects on environmental pressure, primarily driven by changes in savings and investment behaviour, which has long-run consequences for economic activity and environmental pressure.
The results also indicate that the “localization” of international trade has negative consequences for economic activity in all countries that gradually increase over time. This especially hurts export-oriented sectors. Nonetheless, some domestic sectors are better off from being better shielded from international competitors.
The implications for environmental pressure are ambiguous: the reduced economic activity ceteris paribus leads to lower levels of emissions and resource use and waste, but there are significant differences across regions. Most of the improvements come in the export-intensive emerging economies, but at a cost of economic development in these regions.


Resource Details (Export Citation) GTAP Keywords
Category: 2021 Conference Paper
Status: Not published
By/In: Presented during the 24th Annual Conference on Global Economic Analysis (Virtual Conference)
Date: 2021
Version:
Created: Dellink, R. (4/15/2021)
Updated: Dellink, R. (4/15/2021)
Visits: 429
- Dynamic modeling
- Trade and the environment
- Economic crisis
- Economic growth
- Domestic policy analysis


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