Have Countries with Lax Environmental Regulations a Comparative Advantage in Polluting Industries?
AbstractWe aim to study whether lax environmental regulations induce comparative advantages, causing the least-regulated countries to specialize in polluting industries. The study is based on Trefler and Zhu’s (2005) definition of the factor content of trade. For the econometrical analysis, we use a cross-section of 71 countries in 2000 to examine the net exports in the most polluting industries. We try to overcome three weaknesses in the empirical literature: the measurement of environmental endowments or environmental stringency, the possible endogeneity of the explanatory variables, and the influence of the industrial level of aggregation. As a result, we do find some evidence in favor of the pollution-haven effect. The exogeneity of the environmental endowments was rejected in several industries, and we also find that industrial aggregation matters.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 412.
Length: 38 pages
Date of creation: 04 Dec 2009
Date of revision:
Publication status: Published as Quiroga, Miguel, Thomas Sterner and Martin Persson, 'Have Countries with Lax Environmental Regulations a Comparative Advantage in Polluting Industries?' in RFF Discussion Paper Series, RFF DP07-08, 2007, pages 38.
Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
More information through EDIRC
comparative advantage; environmental regulation; trade; pollution haven; Porter hypothesis;
Other versions of this item:
- Quiroga, Miguel & Sterner, Thomas & Persson, Martin, 2007. "Have Countries with Lax Environmental Regulations a Comparative Advantage in Polluting Industries?," Discussion Papers dp-07-08, Resources For the Future.
- F18 - International Economics - - Trade - - - Trade and Environment
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-12-11 (All new papers)
- NEP-ENV-2009-12-11 (Environmental Economics)
- NEP-INT-2009-12-11 (International Trade)
- NEP-REG-2009-12-11 (Regulation)
- NEP-RES-2009-12-11 (Resource Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Josh Ederington & Jenny Minier, 2003.
"Is environmental policy a secondary trade barrier? An empirical analysis,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 36(1), pages 137-154, February.
- Josh Ederington & Jenny Minier, 2000. "Is Environmental Policy a Secondary Trade Barrier? An Empirical Analysis," Econometric Society World Congress 2000 Contributed Papers 1507, Econometric Society.
- Matthew A. Cole & Robert J. R. Elliott, 2003. "Do Environmental Regulations Influence Trade Patterns? Testing Old and New Trade Theories," The World Economy, Wiley Blackwell, vol. 26(8), pages 1163-1186, 08.
- Cole, Matthew A. & Elliott, Robert J.R. & Shimamoto, Kenichi, 2005. "Industrial characteristics, environmental regulations and air pollution: an analysis of the UK manufacturing sector," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 121-143, July.
- Karen Palmer & Wallace E. Oates & Paul R. Portney, 1995. "Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 119-132, Fall.
- Rauscher, Michael, 2005. "International Trade, Foreign Investment, and the Environment," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 3, chapter 27, pages 1403-1456 Elsevier.
- Siebert, Horst, 1977. "Environmental Quality and the Gains from Trade," Kyklos, Wiley Blackwell, vol. 30(4), pages 657-73.
- Siebert, Horst, 1977. "Environmental quality and the gains from trade," Open Access Publications from Kiel Institute for the World Economy 3530, Kiel Institute for the World Economy (IfW).
- 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.
- Trefler, Daniel & Zhu, Susan Chun, 2010.
"The structure of factor content predictions,"
Journal of International Economics,
Elsevier, vol. 82(2), pages 195-207, November.
- Murrell, Peter & Ryterman, Randi, 1991. "A methodology for testing comparative economic theories: Theory and application to East-West environmental policies," Journal of Comparative Economics, Elsevier, vol. 15(4), pages 582-601, December.
- McGuire, Martin C., 1982. "Regulation, factor rewards, and international trade," Journal of Public Economics, Elsevier, vol. 17(3), pages 335-354, April.
- Copeland,B.R. & Scott Taylor,M., 2003.
"Trade, growth and the environment,"
10, Wisconsin Madison - Social Systems.
- 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.
- van Beers, Cees & van den Bergh, Jeroen C J M, 1997. "An Empirical Multi-country Analysis of the Impact of Environmental Regulations on Foreign Trade Flows," Kyklos, Wiley Blackwell, vol. 50(1), pages 29-46.
- Dean, Judith M. & Lovely, Mary E. & Wang, Hua, 2009.
"Are foreign investors attracted to weak environmental regulations? Evaluating the evidence from China,"
Journal of Development Economics,
Elsevier, vol. 90(1), pages 1-13, September.
- Dean, Judith M. & Lovely, Mary E. & Wang, Hua, 2005. "Are foreign investors attracted to weak environmental regulations? Evaluating the evidence from China," Policy Research Working Paper Series 3505, The World Bank.
- Pethig, Rudiger, 1976. "Pollution, welfare, and environmental policy in the theory of Comparative Advantage," Journal of Environmental Economics and Management, Elsevier, vol. 2(3), pages 160-169, February.
- Rauscher, Michael, 1997. "International Trade, Factor Movements, and the Environment," OUP Catalogue, Oxford University Press, number 9780198290506.
- Eliste, Paavo & Fredriksson, Per G., 2002. "Environmental Regulations, Transfers, and Trade: Theory and Evidence," Journal of Environmental Economics and Management, Elsevier, vol. 43(2), pages 234-250, March.
- Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
- Copeland, Brian R & Taylor, M Scott, 1994. "North-South Trade and the Environment," The Quarterly Journal of Economics, MIT Press, vol. 109(3), pages 755-87, August.
- 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.
- Mody, Ashoka & Roy, Subhendu & Wheeler, David & Dasgupta, Susmita, 1995. "Environmental regulation and development : a cross-country empirical analysis," Policy Research Working Paper Series 1448, The World Bank.
- Chichilnisky, Graciela, 1994. "North-South Trade and the Global Environment," American Economic Review, American Economic Association, vol. 84(4), pages 851-74, September.
- Ayres, Robert U & Kneese, Allen V, 1969. "Production , Consumption, and Externalities," American Economic Review, American Economic Association, vol. 59(3), pages 282-97, June.
- Trefler, Daniel, 1993. "Trade Liberalization and the Theory of Endogenous Protection: An Econometric Study of U.S. Import Policy," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 138-60, February.
- Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249, October.
- M A Cole & R J R Elliott, 2003. "Do Environmental Regulations Influence Trade Patterns? Testing New and Old Trade Theories," The School of Economics Discussion Paper Series 0310, Economics, The University of Manchester.
- James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
- Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521311120, October.
- Schoenherr, Tobias, 2012. "The role of environmental management in sustainable business development: A multi-country investigation," International Journal of Production Economics, Elsevier, vol. 140(1), pages 116-128.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marie Andersson).
If references are entirely missing, you can add them using this form.