Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/326938 
Year of Publication: 
2025
Series/Report no.: 
UNU-MERIT Working Papers No. 2025-009
Publisher: 
United Nations University (UNU), Maastricht Economic and Social Research Institute on Innovation and Technology (UNU-MERIT), Maastricht
Abstract: 
The global fragmentation of production has important implications for the environment. As emerging economies increase their participation in trade, scale effects increase environmental impacts worldwide. Yet at the same time, access to international markets might help offset these impacts by increasing the efficiency of production. Existing literature suggests that trading firms tend to be more energy efficient than non-traders. However, this literature does not take into account the effect of firms' product baskets. In this paper, we leverage a rich plantand product-level database from India to investigate the effects of importing on plant-level environmental outcomes. We first construct a measure of energy efficiency that is net of effects arising from plants' product baskets. We then use an event study set up to compare outcomes between importers and future importers at the time of their entry into import markets. Our design takes advantage of plants' staggered entry into importing to address issues of selection. Our findings suggest that after they start importing, plants experience increases in their energy intensity. Plants which start importing also grow larger and more productive, and diversify their product baskets. Our results suggest that access to international markets leads to gains in scale and productivity, but not in environmental performance. This finding suggests that there is an environmental cost to learning and product diversification.
Subjects: 
International Trade
Energy Intensity
Product Basket
Event Study
JEL: 
D22
F10
F14
F18
O11
O33
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-sa Logo
Document Type: 
Working Paper

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