Does Income Growth Relocate Ecological Footprint?

The aim of this paper is to investigate whether countries tend to relocate their ecological footprint as they grow richer. The analysis is carried out for a cross-section of 105 countries by employing the production and import components of the Ecological Footprint data of the Global Footprint Network belonging to the year 2006. With few exceptions, the existing Environmental Kuznets Curve (EKC) literature concentrates only on the income-environmental degradation nexus in the home country and neglects the negative consequences of home consumption spilled out. Controlling for effects of openness to trade, biological capacity, population density, industry share and energy per capita as well as stringency of environmental regulation and environmental regulation enforcement, we detect an EKC-type relationship between per capita income and footprint of domestic production as well as that of import, although the income turning points for import footprint are found to be out of the income range of the sample. Moreover, we find that domestic environmental regulations do not influence country decisions to import environmentally harmful products from abroad; but they do affect domestic production characteristics. Hence, our findings indicate the importance of environmental regulations and provide support for the “Pollution Haven” and “Race-to-the-Bottom” hypotheses.