International trade and global greenhouse gas emissions: could shifting the location of production bring GHG benefits?

This report examines the potential for trade to shift production to the lowest-emission locations and thus reduce overall emissions, and explores the viability of policy approaches to spur such a shift. In recent decades, trade has become a foundation of the world economy – exports now represent nearly a third of global GDP, more than double the share of just 30 years ago. Trade is a significant source of economic growth and improved standards of living, especially in developing countries. However, there is evidence that growth in trade can lead to an increase in global greenhouse gas (GHG) emissions due to increased consumption – what is known as the “scale effect”.