August 15, 2025

The Dual Effects of Green Trade on Boosting Sustainability and Challenging Productivity

Key Points

Green trade contributes to lower carbon emissions but has mixed impacts on productivity levels.
In OECD countries, green trade supports productivity growth where levels are moderate, while slowing it in advanced economies.
Analysis across 33 OECD countries highlights that established green export sectors yield significant productivity benefits.
The findings imply that green trade strategies need adaptation based on a country's economic development stage.

Abstract

This study examines the impact of green trade (GT) on both environmental sustainability and economic productivity across 33 Organization for Economic Co-operation and Development countries. The findings reveal that while GT contributes to lower carbon emissions, its influence on productivity is mixed. In countries with moderate productivity levels, GT supports further growth. However, in more advanced economies, additional GT may slow productivity improvements, highlighting a potential “sustainability trap.” The results also show that established green export sectors tend to yield greater productivity benefits than newer alternatives. It suggests that policymakers should tailor GT strategies to their country’s stage of development.

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