Impacts of international trade on global sustainable development

A nation’s sustainability progress is not only dependent on deliberate actions within the nation, but also affected by hard-to-see consequences from interactions with countries hundreds or even thousands of miles away.
Published in Sustainability
Impacts of international trade on global sustainable development

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The United Nations adopted the 17 Sustainable Development Goals (SDGs) in 2015 to help achieve global sustainable development through environmental conservation, economic development, and social inclusion. To date, 193 nations have committed to these ambitious goals with 169 targets.

Recent SDG assessment studies at the global scale and national scale provide useful insights on how far we are from the UN goals, but few research examined the driving factors. Although it is common sense that domestic policy and resource endowment play a large role in determining the local sustainable development trajectory and levels, we were wondering if other factors outside of a country or region may also shape sustainability’s path. We raised this question because our team has a long tradition of system thinking, and an integrated framework of metacoupling (human-nature interactions within as well as between adjacent and distant places, such as international trade and financial flows) developed by Professor Jianguo “Jack” Liu further inspired us to wonder how impacts from inside and outside of a focal system can influence sustainable development. 

In a globalized world, international trade has been playing an important role in facilitating socio-environmental interactions among countries. Dr. Zhenci Xu, a former Ph.D. student in the Center for Systems Integration and Sustainability at Michigan State University and now a research associate at the University of Michigan, and I thought it would be a great idea to investigate how one country’s action may affect the efforts towards SDGs in another country via trade. The impacts can be very complex because trade can facilitate efficient global resource consumption, stimulate economic growth, and improve social welfare. However, trade is also criticized for inducing negative socio-environmental impacts, for instance, contributing to carbon leakage, biodiversity loss, and deforestation in loose environmental regulation countries, and thus exacerbating environmental and socio-economic inequality between countries. To uncover the complex consequences of trade on sustainability, integrating the metacoupling framework and the UN’s SDG indicator framework would provide a unique perspective, as Prof. Liu suggested.

Virtual water embedded in international trade

Building on our previous work on SDG assessment published in Nature, and an earlier study on global trade analysis, we selected nine environment-related SDG targets that were likely affected by trade and for which there are clear quantitative metrics. These targets are part of goals that address sustainable water use, energy, economic growth, industrialization, forest management, consumption and production, and climate change. The analyses found at the global level international trade improved the global performance in achieving the SDG targets. However, our calculations also revealed that trade improved the SDG scores of most of the evaluated developed countries but reduced the SDG scores of most of the evaluated developing countries. It becomes clear that one nation’s sustainability progress is not only dependent on deliberate actions within the nation, but also impacted by others. Surprisingly, our scenario analyses found SDGs scores of developed countries would sink lower than those of developing countries after excluding the function of trade in the current world. More interestingly, our results indicate distant trade among countries plays a larger role than adjacent trade in shaping global sustainability. This finding further highlights the urgent need to investigate the often ignored “telecouplings’ (human-nature interactions over distances) in affecting socioeconomic and environmental systems, and global sustainability.

The findings from this study can have substantial implications for rethinking global environmental governance and inform policymakers to look into the global supply chain and take a flow-based approach that considers a place in light of its relationships with other places, by tracking and managing where key transboundary impact flows start, progress, and end.

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