Advancing Green Trade and Employment under Global Uncertainty

The paper introduces a structural gravity model of trade to estimate the potential trade in green goods towards 2030. The paper also undertakes a counterfactual analysis to evaluate the potential impact of rising trade tensions on trade flows and employment outcomes. In the model’s simulated scenarios, the United States increases tariffs on its major trading partners, prompting retaliatory measures. The model captures transformations in global trade patterns and highlights the risks that protectionist policies pose to sustainable and inclusive growth. Furthermore, the projected export dynamic is translated into employment outcomes: under the baseline, the growth of green exports to 2030 is associated with some 9.5 million additional jobs worldwide, of which around 530,000 are forgone once tariffs escalate and partners retaliate.

The study uses a multi-regional input-output model to estimate how green exports affect employment. This model combines the Organisation for Economic Co-operation and Development (OECD) Inter-Country Input-Output Tables with labour data from the ILOSTAT database. This approach enables the estimation of both direct and indirect employment effects across countries and sectors. Overall, this study makes a significant contribution to existing literature by jointly analysing green trade flows and employment generation dynamics using a unified quantitative framework. The results emphasize the significance of open trade and investment regimes in promoting the global dissemination of green technologies and generating quality employment opportunities across various regions.