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The Impact of ESG Gaps on Green Exports in Bilateral Trade: A Linear and Nonlinear Analysis

Published online by Cambridge University Press:  19 November 2025

Hao-Zhe He ,
Gen-Fu Feng  and
Chun-Ping Chang Open the ORCID record for Chun-Ping Chang [Opens in a new window]
Hao-Zhe He
Affiliation:
School of Economics and Finance, Xi’an Jiaotong University, Xi’an, China
Gen-Fu Feng
Affiliation:
School of Economics and Finance, Xi’an Jiaotong University, Xi’an, China
Chun-Ping Chang*
Affiliation:
College of Business and Information, Shih Chien University, Kaohsiung, Taiwan
*
Corresponding author: Chun-Ping Chang; Email: cpchang@g2.usc.edu.tw
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Abstract

Drawing on unbalanced panel data with a maximum of 271,656 bilateral trade flow observations from 1996 to 2021, this study investigates both the linear and nonlinear influence of national Environmental, Social, and Governance (ESG) performance gaps on green exports. When the ESG performance of the exporting country exceeds that of the destination country, the results indicate that an increase in the ESG gap significantly stimulates green exports, and there is evidence that this stimulating effect is achieved by widening green innovation gaps. However, the marginal effect diminishes as environmental regulations in the destination country become more stringent. Conversely, when the exporting country’s ESG performance is lower, narrowing the ESG gap leads to an N-shaped relationship with green exports, which remains U-shaped after removing the extremes. This research provides empirical evidence and policy implications for the trade effects of ESG performance from a macro perspective, while supporting the rationality and necessity of the ESG concept.

Keywords

National ESG performance gapcomparative advantagegreen exportstrade flow

JEL classification

Q56: Environment and Development • Environment and Trade • Sustainability • Environmental Accounts and Accounting • Environmental Equity • Population Growth F18: Trade and Environment

Information

Type
Original Article
Information
World Trade Review , First View , pp. 1 - 23
Copyright
© The Author(s), 2025. Published by Cambridge University Press on behalf of The Secretariat of the World Trade Organization.

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