Evaluating ecologically unequal exchange and comparative advantage in the transboundary trade of plastic waste

Trade in plastic waste is a global concern as it has a spillover effect on the environment and could represent unfair trade relations between developed countries and developing countries. Trading plastic waste is supposedly explained by the theory of comparative advantage, which considers opportunity costs. However, the theory of ecologically unequal exchange asserts that when environmental externalities are also taken into account, rich countries disproportionately benefit from exports, as poorer importing countries incur the costs of environmental degradation. Due to the paucity of available literature in this area, the present study uses concrete economic and environmental variables to test the validity of these theoretical claims. A gravity model with panel data for 178 countries from 2005 to 2021 was employed to analyse the trade flows and key determinants. The estimated results offer robust evidence indicating that trade in plastic waste is influenced by tariffs and non-tariff measures, including trade sanctions, biocapacity, and recycling rates by country. Considering the significant role played by differences in environmental indicators, the results support the relevance of the hypothesis of ecologically unequal exchange and the principle of comparative advantage in the trade of plastic waste.