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Testing for Pollution Havens Inside and Outside of Regional Trading Blocs

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  • Kahn Matthew E

    () (Tufts University)

  • Yoshino Yutaka

    () (University of Virginia)

Abstract

This paper examines the composition of bilateral manufacturing trade in terms of its pollution intensity. A growing share of world trade takes place between nations who are members of the same regional trade agreement (RTA). We analyze how the formation of RTAs affects the composition of trade. We focus on whether richer or poorer nations specialize in exporting dirty goods. Using bilateral trade data over the years 1980 to 1997 for 128 nations for 34 manufacturing industries, we document that low-, middle-, and high-income nations differ with respect to their income elasticity in exporting dirty goods. Outside of RTA blocs, we find general support for the pollution haven hypothesis. As a nations income rises, its exports of dirty goods decrease relative to its exports of clean goods. When we compare, low-income, middle-income and high-income nations, we find that middle-income nations have the largest dirty trade income elasticity. Participation in a RTA slightly weakens the pollution haven effect observed outside of regional trading blocs. We also document cross-RTA heterogeneity in the composition of trade across 13 major RTAs in our sample.

Suggested Citation

  • Kahn Matthew E & Yoshino Yutaka, 2004. "Testing for Pollution Havens Inside and Outside of Regional Trading Blocs," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(2), pages 1-32, October.
  • Handle: RePEc:bpj:bejeap:v:advances.4:y:2004:i:2:n:4
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    Citations

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    Cited by:

    1. Jean-Marie Grether & Nicole Andréa Mathys & Jaime de Melo, 2015. "Unravelling the Worldwide Pollution Haven Effect," World Scientific Book Chapters,in: Developing Countries in the World Economy, chapter 23, pages 581-612 World Scientific Publishing Co. Pte. Ltd..
    2. Michida, Etsuyo & Nishikimi, Koji, 2007. "North-South trade and industry-specific pollutants," Journal of Environmental Economics and Management, Elsevier, vol. 54(2), pages 229-243, September.
    3. Frankel, Jeffrey A., 2009. "Environmental Effects of International Trade," Scholarly Articles 4481652, Harvard Kennedy School of Government.
    4. Steven Poelhekke & Frederick Ploeg, 2015. "Green Havens and Pollution Havens," The World Economy, Wiley Blackwell, vol. 38(7), pages 1159-1178, July.
    5. Cave, Lisa A. & Blomquist, Glenn C., 2008. "Environmental policy in the European Union: Fostering the development of pollution havens?," Ecological Economics, Elsevier, vol. 65(2), pages 253-261, April.
    6. John Feddersen, 2012. "Why we can't confirm the pollution haven hypothesis: A model of carbon leakage with agglomeration," Economics Series Working Papers 613, University of Oxford, Department of Economics.
    7. Silvina Vilas-Ghiso & Diana Liverman, 2007. "Scale, technique and composition effects in the Mexican agricultural sector: the influence of NAFTA and the institutional environment," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 7(2), pages 137-169, June.
    8. Trotignon, Jérôme, 2010. "La Restriction des émissions de CO2 pénalise-t-elle les exportations? Un modèle de gravité avec données de panel et variables muettes régionales," L'Actualité Economique, Société Canadienne de Science Economique, vol. 86(1), pages 5-33, mars.
    9. Paul Missios & Halis Murat Yildiz & Ida Ferrara, 2009. "Foreign Direct Investment and the Choice of Environmental Policy," Working Papers 004, Ryerson University, Department of Economics.
    10. Kellenberg, Derek K., 2009. "An empirical investigation of the pollution haven effect with strategic environment and trade policy," Journal of International Economics, Elsevier, vol. 78(2), pages 242-255, July.
    11. Frank Ackerman, "undated". "06-02 "The Unbearable Lightness of Regulatory Costs"," GDAE Working Papers 06-02, GDAE, Tufts University.
    12. Jérôme Trotignon, 2010. "La restriction des émissions de CO2 pénalise-t-elle les exportations ? Un modèle de gravité avec données de panel et variables muettes régionales," Post-Print halshs-00477244, HAL.
    13. Baomin Dong & Jiong Gong & Xin Zhao, 2012. "FDI and environmental regulation: pollution haven or a race to the top?," Journal of Regulatory Economics, Springer, vol. 41(2), pages 216-237, April.
    14. Robert SOVA & Ion STANCU & Laurentiu FRATILA & Anamaria SOVA, 2011. "Corporate Social Responsibility and its Macroeconomic Implications," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 12(1), pages 172-183, March.
    15. Kellenberg, Derek, 2012. "Trading wastes," Journal of Environmental Economics and Management, Elsevier, vol. 64(1), pages 68-87.
    16. Cunha, Barbara & Mani, Muthukumara, 2011. "DR-CAFTA and the environment," Policy Research Working Paper Series 5826, The World Bank.

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