Trade & Development Chart: How trade reduces greenhouse gas emissions

Trade is part of the solution to climate change. Data shows that replacing imports with goods made at home would increase GHG emissions rather than reducing them.

The production of goods for export rather than domestic consumption accounts for a significant share of global greenhouse gas (GHG) emissions. From 2004 to 2021, its share of global emissions rose from 13 percent to 31 percent, much faster than trade overall, which increased from 39 percent of global GDP to 43 percent over the same period. But reducing trade won’t lower emissions. On the contrary, if developing countries were able to replace all their imports with goods made at home, global emissions would likely increase. The reason: In many developing countries, locally produced goods are more emissions-intensive than imports. Trade, by allocating resources more efficiently, makes it possible for the world to consume more goods while also reducing GHG emissions. The chart shows that trade prevented between 0.9 percent and 2.2 percent of global GHG emissions (390 to 954 Mt CO2 eq) from 2004 to 2021.