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Economic development, environmental regulation, and the international migration of toxic industrial pollution : 1960-88

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Author Info

  • Lucas, Robert E.B.
  • Wheeler, David
  • Hettige, Hemamala

Abstract

Several previous studies have asked whether environmental controls imposed in the industrial economies are diverting investments in pollution-intensive activities off-shore. Broadly, these studies conclude that direct investment does not appear to be stimulated by such regulations, partly because the cost of emission controls is generally a tiny fraction of operating costs. Yet direct investment reflects only part of what may be happening to world production patterns. Technology transfers may occur with no simultaneous direct investments, and production may readily shift toward a different global distribution without either direct investment or technology transfer. The authors attempt a general test of the displacement hypothesis, developing time series estimates of manufacturing pollution intensity for a large sample of developed and developing countries between 1960 and 1988. Among their conclusions: As a result of shifts in industrial composition, total manufacturing emissions relative to GDP grow faster than GDP at lower levels of per capita income and slower than GDP at higher levels of income. This happens because manufacturing has a declining share of GDP at higher income levels, not because of any shift toward a cleaner mix of manufacturing activities. The more rapidly growing high-income countries have actually enjoyed negative growth in toxic intensity of their manufacturing mix. Stricter regulation of pollution-intensive production in the OECD countries appears to have led to significant locational displacement, with consequent acceleration of industrial pollution intensity in developing countries. The poorest economies seem to have the highest growth in toxic intensity. One cannot, of course, be certain of the causal connection. Pollution intensity has grown most rapidly in developing economies that are relatively closed to world market forces. Relatively closed, fast-growing economies experienced rapid structural transitions toward greater toxic intensity. The opposite seems to have been true for more open economies.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1062.

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Date of creation: 31 Dec 1992
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Handle: RePEc:wbk:wbrwps:1062

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Related research

Keywords: Environmental Economics&Policies; Economic Theory&Research; Energy and Environment; Water and Industry; Health Monitoring&Evaluation;

References

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  1. Dean, Judith M., 1992. "Trade and the environment : a survey of the literature," Policy Research Working Paper Series 966, The World Bank.
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Citations

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Cited by:
  1. Coxhead, Ian, 2002. "Development and the Environment in Asia: A Survey of Recent Literature," Staff Paper Series 455, University of Wisconsin, Agricultural and Applied Economics.
  2. Wilson, John S. & Sewadeh, Mirvat & Otsuki, Tsunehiro, 2001. "Environmental Standards And Dirty Exports: A Case Study Analysis Of 24 Countries," 2001 Annual meeting, August 5-8, Chicago, IL 20526, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  3. Baek, Jungho & Cho, Yongsung & Koo, Won W., 2008. "The Environmental Consequences of Globalization: A Country-Specific Time-Series Analysis," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6510, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Vukina, Tomislav & Beghin, John C. & Solakoglu, Ebru G., 1999. "Transition to markets and the environment: Effects of the change in the composition of manufacturing output," Environment and Development Economics, Cambridge University Press, vol. 4(04), pages 582-598, October.
  5. Stratford Douglas & Shuichiro Nishioka, 2009. "International Differences in Emissions Intensity and Emissions Content of Global Trade," Working Papers 09-02, Department of Economics, West Virginia University.
  6. Halicioglu, Ferda, 2008. "An econometric study of CO2 emissions, energy consumption, income and foreign trade in Turkey," MPRA Paper 11457, University Library of Munich, Germany.
  7. Suri, Vivek & Chapman, Duane, 1998. "Economic growth, trade and energy: implications for the environmental Kuznets curve," Ecological Economics, Elsevier, vol. 25(2), pages 195-208, May.
  8. Nasir, Muhammad & Ur Rehman, Faiz, 2011. "Environmental Kuznets Curve for carbon emissions in Pakistan: An empirical investigation," Energy Policy, Elsevier, vol. 39(3), pages 1857-1864, March.
  9. Drosdowski, Thomas, 2006. "On the Link Between Democracy and Environment," Hannover Economic Papers (HEP) dp-355, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  10. Qureshi, M.S., 2006. "Trade Liberalization, Environment and Poverty: A Developing Country Perspective," Working Paper Series RP2006/45, World Institute for Development Economic Research (UNU-WIDER).
  11. Rauscher, Michael, 2001. "International Trade, Foreign Investment, and the Enivronment," Thuenen-Series of Applied Economic Theory 29, University of Rostock, Institute of Economics.
  12. Bajona, Claustre & Kelly, David L., 2012. "Trade and the environment with pre-existing subsidies: A dynamic general equilibrium analysis," Journal of Environmental Economics and Management, Elsevier, vol. 64(2), pages 253-278.
  13. Cavlovic, Therese A. & Baker, Kenneth H. & Berrens, Robert P. & Gawande, Kishore, 2000. "A Meta-Analysis Of Environmental Kuznets Curve Studies," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 29(1), April.
  14. Jayadevappa, Ravishankar & Chhatre, Sumedha, 2000. "International trade and environmental quality: a survey," Ecological Economics, Elsevier, vol. 32(2), pages 175-194, February.
  15. Rauscher, Michael, 1994. "Environmental regulation and the location of polluting industries," Kiel Working Papers 639, Kiel Institute for the World Economy.
  16. Anriquez, Gustavo, 2002. "Trade And The Environment: An Economic Literature Survey," Working Papers 28598, University of Maryland, Department of Agricultural and Resource Economics.
  17. Jie He, 2007. "Is the Environmental Kuznets Curve hypothesis valid for developing countries? A survey," Cahiers de recherche 07-03, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.

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