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.
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Bibliographic InfoPaper provided by Resources For the Future in its series Discussion Papers with number dp-07-08.
Date of creation: 24 Apr 2007
Date of revision:
comparative advantage; environmental regulation; trade; pollution haven; Porter hypothesis;
Other versions of this item:
- Quiroga, Miguel & Sterner, Thomas & Persson, Martin, 2009. "Have Countries with Lax Environmental Regulations a Comparative Advantage in Polluting Industries?," Working Papers in Economics 412, University of Gothenburg, Department of Economics.
- 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-2007-05-19 (All new papers)
- NEP-ENV-2007-05-19 (Environmental Economics)
- NEP-INT-2007-05-19 (International Trade)
- NEP-REG-2007-05-19 (Regulation)
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