Does international trade contribute to eco-efficiency performance improvement? Evidence from the emerging and developing economies

We provide the first empirical study analyzing the effect of international trade on economy-wide eco-efficiency performances based on the emerging and developing economies. We extend the slack-based measure (SBM) model in Tone (Tone, 2004). Dealing with undesirable outputs in DEA: A slacks-based measure (SBM) approach. In: Presentation at NAPW III, Toront.) to the time-dependent conditional SBM model. The extended model proposed in this study considers the influences of exogenous variables and time, thereby circumventing the problem of biased estimates due to the assumption of a “separability” condition. Based on the comparison of conditional and unconditional eco-efficiency index (EEI) scores of 71 developing countries, we find that the improved conditional SBM model can more accurately measure the level of eco-efficiency. The nonparametric significance test and the location-scale test techniques are then employed to investigate the non-linear relationship between international trade and eco-efficiency performance. We find a U-shaped relationship between international trade and eco-efficiency performances of the emerging and developing economies, indicating that international trade had a negative effect on eco-efficiency performance when it was in the initial stage of development, while the effect becomes positive after international trade has reached a certain level. The policy implications for how to coordinate the relationship between trade openness, economic development, and ecological protection in developing countries are discussed in this article.