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Air Pollution and ‘Dirty’ Industries: How and Why Does the Composition of Manufacturing Output Change with Economic Development?

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  • Matthew Cole

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Abstract

This paper examines the impact on air pollution ofchanges in the composition of manufacturing output indeveloped and developing countries. Pollutionemissions from manufacturing output are estimated ina manner which holds constant the effect of technologyand regulations allowing the impact of compositional changes alone on pollution to beestimated. The paper has three main findings; (1) theinverted-U estimated between per capita income and thepollution intensity of GDP arises due to both thecomposition of manufacturing becoming cleaner and theshare of manufacturing output in GDP falling.Compositional changes alone are not responsible forthe inverted-U between per capita income and percapita emissions; (2) changes to the composition ofmanufacturing output are consistent with the pollutionhaven hypothesis, however there is clear evidence thatrising per capita incomes are associated with afalling income elasticity of demand for `dirty'products. This fact may explain the compositionalchanges that occur with development; (3) in additionto the income elasticity effect, the analysis suggeststhat land prices and to a lesser extent the prices oflabour and capital, determine the proportion of dirtyindustry within a country's manufacturing sector. Copyright Kluwer Academic Publishers 2000

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Bibliographic Info

Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 17 (2000)
Issue (Month): 1 (September)
Pages: 109-123

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Handle: RePEc:kap:enreec:v:17:y:2000:i:1:p:109-123

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Web page: http://www.springerlink.com/link.asp?id=100263

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Keywords: economic development; industrial composition; pollution havens; air pollution;

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  1. Grossman, Gene M & Krueger, Alan B, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 353-77, May.
  2. Martin Jänicke & Manfred Binder & Harald Mönch, 1997. "‘Dirty industries’: Patterns of change in industrial countries," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 9(4), pages 467-491, June.
  3. P Ekins, 1997. "The Kuznets curve for the environment and economic growth: examining the evidence," Environment and Planning A, Pion Ltd, London, vol. 29(5), pages 805-830, May.
  4. Stern, David I. & Common, Michael S. & Barbier, Edward B., 1996. "Economic growth and environmental degradation: The environmental Kuznets curve and sustainable development," World Development, Elsevier, vol. 24(7), pages 1151-1160, July.
  5. Shafik, Nemat, 1994. "Economic Development and Environmental Quality: An Econometric Analysis," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 757-73, Supplemen.
  6. Selden Thomas M. & Song Daqing, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 147-162, September.
  7. Susmita Dasgupta & Ashoka Mody & Subhendu Roy & David Wheeler, 2001. "Environmental Regulation and Development: A Cross-country Empirical Analysis," Oxford Development Studies, Taylor & Francis Journals, vol. 29(2), pages 173-187.
  8. Cole, M.A. & Rayner, A.J. & Bates, J.M., 1997. "The environmental Kuznets curve: an empirical analysis," Environment and Development Economics, Cambridge University Press, vol. 2(04), pages 401-416, November.
  9. Tobey, James A, 1990. "The Effects of Domestic Environmental Policies on Patterns of World Trade: An Empirical Test," Kyklos, Wiley Blackwell, vol. 43(2), pages 191-209.
  10. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
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Cited by:
  1. José-Antonio Monteiro & Madina Kukenova, 2008. "Does Lax Environmental Regulation Attract FDI When Accounting For "Third-Country" Effects?," IRENE Working Papers 08-01, IRENE Institute of Economic Research.
  2. Mina Baliamoune-Lutz, 2012. "Trade and Environmental Quality in African Countries: Do Institutions Matter?," ICER Working Papers 14-2012, ICER - International Centre for Economic Research.
  3. Bruvoll, Annegrete & Faehn, Taran, 2006. "Transboundary effects of environmental policy: Markets and emission leakages," Ecological Economics, Elsevier, vol. 59(4), pages 499-510, October.
  4. Ogundipe, Adeyemi & Alege, Philip & Ogundipe, Oluwatomisin, 2014. "Income Heterogeneity and Environmental Kuznets Curve in Africa," MPRA Paper 55822, University Library of Munich, Germany.
  5. Cole, Matthew A., 2004. "Trade, the pollution haven hypothesis and the environmental Kuznets curve: examining the linkages," Ecological Economics, Elsevier, vol. 48(1), pages 71-81, January.
  6. Merlevede, Bruno & Verbeke, Tom & De Clercq, Marc, 2006. "The EKC for SO2: Does firm size matter?," Ecological Economics, Elsevier, vol. 59(4), pages 451-461, October.
  7. Jing Lan & Makoto Kakinaka & Xianguo Huang, 2012. "Foreign Direct Investment, Human Capital and Environmental Pollution in China," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 51(2), pages 255-275, February.
  8. Cole, Matthew A., 2004. "US environmental load displacement: examining consumption, regulations and the role of NAFTA," Ecological Economics, Elsevier, vol. 48(4), pages 439-450, April.
  9. Wagner, Gernot, 2010. "Energy content of world trade," Energy Policy, Elsevier, vol. 38(12), pages 7710-7721, December.

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