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Air Pollution and ‘Dirty’ Industries: How and Why Does the Composition of Manufacturing Output Change with Economic Development?

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  • Matthew Cole

Abstract

This paper examines the impact on air pollution ofchanges in the composition of manufacturing output indeveloped and developing countries. Pollutionemissions from manufacturing output are estimated ina manner which holds constant the effect of technologyand regulations allowing the impact of compositional changes alone on pollution to beestimated. The paper has three main findings; (1) theinverted-U estimated between per capita income and thepollution intensity of GDP arises due to both thecomposition of manufacturing becoming cleaner and theshare of manufacturing output in GDP falling.Compositional changes alone are not responsible forthe inverted-U between per capita income and percapita emissions; (2) changes to the composition ofmanufacturing output are consistent with the pollutionhaven hypothesis, however there is clear evidence thatrising per capita incomes are associated with afalling income elasticity of demand for `dirty'products. This fact may explain the compositionalchanges that occur with development; (3) in additionto the income elasticity effect, the analysis suggeststhat land prices and to a lesser extent the prices oflabour and capital, determine the proportion of dirtyindustry within a country's manufacturing sector. Copyright Kluwer Academic Publishers 2000

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  • Matthew Cole, 2000. "Air Pollution and ‘Dirty’ Industries: How and Why Does the Composition of Manufacturing Output Change with Economic Development?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 17(1), pages 109-123, September.
    • Handle: RePEc:kap:enreec:v:17:y:2000:i:1:p:109-123
    DOI: 10.1023/A:1008388221831
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    5. Arik Levinson, 2015. "A Direct Estimate of the Technique Effect: Changes in the Pollution Intensity of US Manufacturing, 1990-2008," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(1), pages 43-56.
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    11. Ilker Akar, 2019. "The Pollution Haven Hypothesis and Foreign Trade - A Survey on the Relation with Environment," Economics Literature, WERI-World Economic Research Institute, vol. 1(1), pages 37-50, June.
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    13. 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.
    14. Salahodjaev, Raufhon & Yuldashev, Oybek & Omanbayev, Bekhzod, 2016. "Cognitive abilities and air pollution," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 12(4).
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    16. Wagner, Gernot, 2010. "Energy content of world trade," Energy Policy, Elsevier, vol. 38(12), pages 7710-7721, December.
    17. Song, Danbee & Sam, Abdoul G., 2018. "Voluntary Environmental Program and Export Performance," 2018 Annual Meeting, August 5-7, Washington, D.C. 274425, Agricultural and Applied Economics Association.
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    20. Anna Shostya, 2016. "Ambient Air Pollution in China: Predicting a Turning Point," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 22(3), pages 295-307, August.
    21. Okon Emmanuel O., 2021. "Nigeria: Is There an Environmental Kuznets Curve for Fluorinated Gases?," Open Economics, De Gruyter, vol. 4(1), pages 57-71, January.
    22. Friedl, Birgit & Getzner, Michael, 2003. "Determinants of CO2 emissions in a small open economy," Ecological Economics, Elsevier, vol. 45(1), pages 133-148, April.
    23. Ogundipe, Adeyemi & Alege, Philip & Ogundipe, Oluwatomisin, 2014. "Income Heterogeneity and Environmental Kuznets Curve in Africa," MPRA Paper 55822, University Library of Munich, Germany.
    24. Cole, Matthew A., 2004. "Trade, the pollution haven hypothesis and the environmental Kuznets curve: examining the linkages," Ecological Economics, Elsevier, vol. 48(1), pages 71-81, January.

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