Foreign trade and declining pollution in Sweden: a decomposition analysis of long-term structural and technological effects

This article examines whether there exists any causal relationship between foreign trade and declining pollution in developed countries. In other words, do developed countries outsource their problems to less developed countries rather than solve them? The case study is the Swedish economy and the two environmental indicators employed are energy consumption and CO₂ emissions. No causal relationships are found, since Sweden has long been a net exporter of embodied energy and CO₂ and continues to be so after 1970, when energy consumption stabilizes and CO₂ emissions decline. In addition, the ratios of net exported energy and CO₂ to total consumption remain stable, which means there were no effects on the energy intensity or CO₂ intensity either. These results suggest that internal forces, like efficiency improvements, changed consumption patterns and transformation of the energy system, have been crucial for relative environmental improvement in Sweden, while foreign trade has played no role.