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Environmental regulation and revealed comparative advantages in Europe: is China a pollution haven?

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  • Daniela Marconi

    () (Bank of Italy)

Abstract

The relocation of more polluting industries in poorer countries due to gaps in environmental standards is known as the pollution haven effect, whereby the scale and the composition of output change across countries. Changes in the composition of the output mix might translate into changes of comparative advantages across countries, as revealed by trade flows. This paper focus on this issue and looks at the changes of bilateral revealed comparative advantages (RCAs) in the last decade between China and the major fourteen EU countries (EU14). Using industry level data on bilateral trade, air pollution, water pollution and several measures of environmental stringency, we find that, controlling for other factors that may have affected RCAs, such as labor costs, on average our EU14 countries have kept or improved their advantages with respect to China in both water polluting industries (such as paper and agro-based industries) and air polluting industries (such as basic metals and chemicals), while they have lost competitiveness in the more clean industries (such as machinery and fabricated metals).

Suggested Citation

  • Daniela Marconi, 2010. "Environmental regulation and revealed comparative advantages in Europe: is China a pollution haven?," Questioni di Economia e Finanza (Occasional Papers) 67, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:opques:qef_67_10
    as

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    File URL: http://www.bancaditalia.it/pubblicazioni/qef/2010-0067/QEF_67.pdf
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    References listed on IDEAS

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    1. Carl Pasurka, 2008. "Perspectives on Pollution Abatement and Competitiveness: Theory, Data, and Analyses," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 2(2), pages 194-218, Summer.
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    Cited by:

    1. Vaccarini, Katiuscia & Lattemann, Christoph & Spigarelli, Francesca & Tavoletti, Ernesto, 2017. "Chinese FDI and psychic distance perceptions on regulations in the German renewable energy sector," Energy Policy, Elsevier, vol. 101(C), pages 723-732.
    2. Jean-Christophe Bureau & Sébastien Jean, 2013. "International Agricultural Trade and Negotiations : Coping with a New Landscape
      [Commerce et négociations agricoles commerciales: s'ajuster au nouvel environnement]
      ," Working Papers hal-01592099, HAL.
    3. Tonghui Lian & Tingyu Ma & Jie Cao & You Wu, 2016. "The effects of environmental regulation on the industrial location of China’s manufacturing," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 80(2), pages 1381-1403, January.
    4. Tonghui Lian & Tingyu Ma & Jie Cao & You Wu, 2016. "The effects of environmental regulation on the industrial location of China’s manufacturing," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 80(2), pages 1381-1403, January.
    5. Mireille Chiroleu-Assouline, 2015. "La fiscalité environnementale en France peut-elle devenir réellement écologique ?. État des lieux et conditions d’acceptabilité," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(3), pages 129-165.

    More about this item

    Keywords

    revealed comparative advantages; environmental regulation; industrial pollution;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F18 - International Economics - - Trade - - - Trade and Environment

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