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Are ASEAN Countries Havens for Japanese Pollution-Intensive Industry?

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  • Robert J. R. Elliott
  • Kenichi Shimamoto

Abstract

In an era of closer worldwide economic integration, the role that environmental regulations play in shaping a country's comparative advantage is greater than ever. This has led to fears that 'dirty' firms will relocate from developed to developing countries where environmental regulations may be less stringent - the so-called pollution haven hypothesis. To date, however, there is little support for the existence of pollution havens despite anecdotal evidence and the theoretical predictions. In this paper we employ a unique industry-level dataset for Japan and examine whether Japanese industries have relocated production to their ASEAN neighbours in response to the relative stringency of Japanese environmental regulations. Not only do we find no evidence for pollution-haven-consistent behaviour but also some indication that the complex relationship between the characteristics of Japanese dirty industries and environmental regulations may actually have reduced Japanese outward FDI to the Philippines. Copyright 2008 The Authors.

Suggested Citation

  • Robert J. R. Elliott & Kenichi Shimamoto, 2008. "Are ASEAN Countries Havens for Japanese Pollution-Intensive Industry?," The World Economy, Wiley Blackwell, vol. 31(2), pages 236-254, February.
  • Handle: RePEc:bla:worlde:v:31:y:2008:i:2:p:236-254
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    References listed on IDEAS

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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.
    2. James R. Markusen, 2004. "Multinational Firms and the Theory of International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633078, May.
    3. Lucas, Robert E.B. & Wheeler, David & Hettige, Hemamala, 1992. "Economic development, environmental regulation, and the international migration of toxic industrial pollution : 1960-88," Policy Research Working Paper Series 1062, The World Bank.
    4. 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.
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    Cited by:

    1. Copeland, Brian R., 2012. "International trade and green growth," Policy Research Working Paper Series 6235, The World Bank.
    2. Ulrich Wagner & Christopher Timmins, 2009. "Agglomeration Effects in Foreign Direct Investment and the Pollution Haven Hypothesis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(2), pages 231-256, June.
    3. Zhu, Huiming & Duan, Lijun & Guo, Yawei & Yu, Keming, 2016. "The effects of FDI, economic growth and energy consumption on carbon emissions in ASEAN-5: Evidence from panel quantile regression," Economic Modelling, Elsevier, vol. 58(C), pages 237-248.
    4. Rashmi Rastogi & Aparna Sawhney, "undated". "What Attracts FDI in Indian Manufacturing Industries?," Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers 13-02, Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India.
    5. Al-mulali, Usama & Foon Tang, Chor, 2013. "Investigating the validity of pollution haven hypothesis in the gulf cooperation council (GCC) countries," Energy Policy, Elsevier, vol. 60(C), pages 813-819.
    6. Michikazu Kojima & Etsuyo Michida, 2011. "Trade and the Environment," Chapters,in: The Economics of East Asian Integration, chapter 18 Edward Elgar Publishing.
    7. Lorena D’Agostino, 2015. "How MNEs respond to environmental regulation: integrating the Porter hypothesis and the pollution haven hypothesis," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 32(2), pages 245-269, August.
    8. Rezza, Alief A., 2013. "FDI and pollution havens: Evidence from the Norwegian manufacturing sector," Ecological Economics, Elsevier, vol. 90(C), pages 140-149.
    9. Kukenova, Madina & Monteiro, Jose-Antonio, 2008. "Does Lax Environmental Regulation Attract FDI when accounting for "third-country" effects?," MPRA Paper 11321, University Library of Munich, Germany, revised Sep 2008.
    10. Xiao Chen & Alan Woodland, 2013. "International trade and climate change," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(3), pages 381-413, June.
    11. Chandran, V.G.R. & Tang, Chor Foon, 2013. "The impacts of transport energy consumption, foreign direct investment and income on CO2 emissions in ASEAN-5 economies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 24(C), pages 445-453.
    12. Grégoire Garsous & Tomasz Kozluk, 2017. "Foreign Direct Investment and The Pollution Haven Hypothesis: Evidence from Listed Firms," OECD Economics Department Working Papers 1379, OECD Publishing.
    13. Yang Lu, 2010. "Do environmental regulations influence the competitiveness of pollution-intensive products?," Frontiers of Economics in China, Springer;Higher Education Press, vol. 5(2), pages 276-298, June.
    14. Arimura, Toshihide & Iguchi, Hakaru & Michida, Etsuyo, 2014. "Product-related environmental regulation and voluntary environmental actions : impacts of RoHS and REACH in Malaysia," IDE Discussion Papers 454, Institute of Developing Economies, Japan External Trade Organization(JETRO).

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