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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.

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
    DOI: 10.1111/j.1467-9701.2007.01088.x
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    2. 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.
    3. Yuldoshboy Sobirov & Beruniy Artikov & Elbek Khodjaniyozov & Peter Marty & Olimjon Saidmamatov, 2025. "Economic Growth, FDI, Tourism, and Agricultural Productivity as Drivers of Environmental Degradation: Testing the EKC Hypothesis in ASEAN Countries," Sustainability, MDPI, vol. 17(18), pages 1-24, September.
    4. Chen, Weixiong & Hao, Hanyu, 2025. "Environmental regulation and outward FDI of Chinese listed companies: The role of technological innovations," Economic Analysis and Policy, Elsevier, vol. 87(C), pages 1797-1816.
    5. Kaiyuan Ji & Xiangya Kong & Chun-Kai Leung & Kwok-Leung Shum, 2025. "Navigating Sustainability Through Environmental Regulations: Assessing the Effects of Command-and-Control and Market-Incentive Policies on Carbon Emissions in China," Sustainability, MDPI, vol. 17(6), pages 1-25, March.
    6. Aparna Sawhney & Rashmi Rastogi, 2019. "FDI in Indian Manufacturing: Whither high-tech industries?," Economics Bulletin, AccessEcon, vol. 39(3), pages 2192-2209.
    7. Zhao, Jinjing & Li, Ai & Roh, Taewoo & Su, Miao, 2025. "Escaping regulation or embracing innovation? Substantive green Innovation's role in moderating environmental policy and outward foreign direct investment," Energy, Elsevier, vol. 316(C).
    8. Thi Anh-Dao Tran & Sy-Hoa Ho & Thanh Tam Nguyen-Huu, 2025. "The Role of CO2 Emission and Foreign Direct Investment in ASEAN’s Trade Patterns," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(2), pages 8807-8839, June.
    9. Rezza, Alief A., 2013. "FDI and pollution havens: Evidence from the Norwegian manufacturing sector," Ecological Economics, Elsevier, vol. 90(C), pages 140-149.
    10. Jensen, Camilla & Mina, Andrea, 2019. "Did transition bring cleaner air? Effects of ownership, territorial and technology policy on air pollution," Ecological Economics, Elsevier, vol. 165(C), pages 1-1.
    11. 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.
    12. José-Antonio Monteiro & Madina Kukenova, 2008. "Does Lax Environmental Regulation Attract FDI When Accounting For "Third-Country" Effects?," IRENE Working Papers 08-01, IRENE Institute of Economic Research.
    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. Ai, Hongshan & Xiong, Shiya & Li, Ke & Jia, Pinrong, 2020. "Electricity price and industrial green productivity: Does the “low-electricity price trap” exist?," Energy, Elsevier, vol. 207(C).
    15. Zhonghua Cheng & Lianshui Li & Jun Liu, 2018. "The spatial correlation and interaction between environmental regulation and foreign direct investment," Journal of Regulatory Economics, Springer, vol. 54(2), pages 124-146, October.
    16. Copeland, Brian R., 2012. "International trade and green growth," Policy Research Working Paper Series 6235, The World Bank.
    17. 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.
    18. 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.
    19. 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.
    20. Michikazu Kojima & Etsuyo Michida, 2011. "Trade and the Environment," Chapters, in: Masahisa Fujita & Ikuo Kuroiwa & Satoru Kumagai (ed.), The Economics of East Asian Integration, chapter 18, Edward Elgar Publishing.
    21. 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.
    22. 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.
    23. 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.
    24. 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).
    25. Masayoshi Ike & Jerome Denis Donovan & Cheree Topple & Eryadi Kordi Masli, 2024. "Pollution Havens in South-East Asia: Examining Japanese Multinational Enterprises in the Philippines," Sustainability, MDPI, vol. 16(10), pages 1-14, May.

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