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Does trade openness improve environmental quality?

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Author Info

  • Managi, Shunsuke
  • Hibiki, Akira
  • Tsurumi, Tetsuya

Abstract

The literature on trade openness, economic development, and the environment is largely inconclusive about the environmental consequences of trade. This study treats trade and income as endogenous and estimates the overall impact of trade openness on environmental quality using the instrumental variables technique. We find that whether or not trade has a beneficial effect on the environment varies depending on the pollutant and the country. Trade is found to benefit the environment in OECD countries. It has detrimental effects, however, on sulfur dioxide (SO2) and carbon dioxide (CO2) emissions in non-OECD countries, although it does lower biochemical oxygen demand (BOD) emissions in these countries. We also find the impact is large in the long term, after the dynamic adjustment process, although it is small in the short term.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 58 (2009)
Issue (Month): 3 (November)
Pages: 346-363

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Handle: RePEc:eee:jeeman:v:58:y:2009:i:3:p:346-363

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Web page: http://www.elsevier.com/locate/inca/622870

Related research

Keywords: Trade openness Composition effect Scale effect Technique effect Environment Comparative advantage Environmental regulations effect;

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References

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  1. Cole, Matthew A. & Elliott, Robert J. R., 2003. "Determining the trade-environment composition effect: the role of capital, labor and environmental regulations," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 363-383, November.
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