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Global Ripple Effects : Knock-on Effects of EU, US, and China Climate Policies on Developing Countries’ Trade

Author

Listed:
  • Enrique Aldaz-Carroll
  • Euijin Jung
  • Maryla Maliszewska
  • Iryna Sikora
Abstract
The three major players in the global economy, the United States, the European Union, and China, have been designing climate mitigation policies that will help reduce their carbon emissions but will also likely reshape developing countries’ trade, prices, and access to technology. This paper examines developing countries’ exposure to such changes. Overall, the policies are expected to curtail demand for fossil fuels, energy-intensive manufacturing, and agricultural exports linked to environmental degradation. They are also expected to open export opportunities in critical minerals, electric vehicles and their components, and renewable energy technologies and components. The exposure of affected export sectors and the overall economy to these changes will vary across countries based on the orientation of their export sectors to the markets in the European Union, the United States, and Chinese as well as the weight of affected exports in their economies. The climate policies will also likely reduce oil prices and raise critical mineral prices, help reduce the cost of green technologies, and increase green foreign investment. The paper draws recommendations for developing countries, the European Union, the United States, and China, as well as the international community, on how best to help developing countries lessen the potential negative competitiveness effects of these climate policies and make the most of the opportunities for a faster green transition and economic development.

Suggested Citation

  • Enrique Aldaz-Carroll & Euijin Jung & Maryla Maliszewska & Iryna Sikora, 2024. "Global Ripple Effects : Knock-on Effects of EU, US, and China Climate Policies on Developing Countries’ Trade," Policy Research Working Paper Series 10988, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10988
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    References listed on IDEAS

    as
    1. Yan, Wan-Lin & Cheung, Adrian (Wai Kong), 2023. "The dynamic spillover effects of climate policy uncertainty and coal price on carbon price: Evidence from China," Finance Research Letters, Elsevier, vol. 53(C).
    2. World Bank Group, 2022. "China Country Climate and Development Report," World Bank Publications - Reports 38136, The World Bank Group.
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