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Pollution Haven Hypothesis or Factor Endowment Hypothesis: Theory and Empirical Examination for the US and China

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  • Umed Temurshoev

Abstract

This paper examines how free international trade affects the environment in the developed and less developed worlds. Using input-output techniques, tests of the pollution haven hypothesis (PHH) and the factor endowment hypothesis (FEH) for the US and China were empirically carried out. We found that China gains and the US lose in terms of CO2, SO2 and NOx emissions from increased trade, and the US is not exporting capital intensive goods. Thus both the PHH and the FEH are rejected, which implies that explaining the trade of pollutants remains an unresolved puzzle.

Suggested Citation

  • Umed Temurshoev, 2006. "Pollution Haven Hypothesis or Factor Endowment Hypothesis: Theory and Empirical Examination for the US and China," CERGE-EI Working Papers wp292, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
  • Handle: RePEc:cer:papers:wp292
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    References listed on IDEAS

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    1. Di Maria Corrado & Smulders Sjak A., 2005. "Trade Pessimists vs Technology Optimists: Induced Technical Change and Pollution Havens," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(2), pages 1-27, January.
    2. Hitoshi Hayami & Masao Nakamura & Mikio Suga & Kanji Yoshioka, 1997. "Environmental Management in Japan: Applications of Input-Output Analysis to the Emission of Global Warming Gases," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 18(2), pages 195-208.
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    5. Proops, John L. R. & Atkinson, Giles & Schlotheim, Burkhard Frhr. v. & Simon, Sandrine, 1999. "International trade and the sustainability footprint: a practical criterion for its assessment," Ecological Economics, Elsevier, vol. 28(1), pages 75-97, January.
    6. Mukhopadhyay, Kakali & Forssell, Osmo, 2005. "An empirical investigation of air pollution from fossil fuel combustion and its impact on health in India during 1973-1974 to 1996-1997," Ecological Economics, Elsevier, vol. 55(2), pages 235-250, November.
    7. Machado, Giovani & Schaeffer, Roberto & Worrell, Ernst, 2001. "Energy and carbon embodied in the international trade of Brazil: an input-output approach," Ecological Economics, Elsevier, vol. 39(3), pages 409-424, December.
    8. Xu, Xinpeng, 1999. "Do Stringent Environmental Regulations Reduce the International Competitiveness of Environmentally Sensitive Goods? A Global Perspective," World Development, Elsevier, vol. 27(7), pages 1215-1226, July.
    9. Wyckoff, Andrew W. & Roop, Joseph M., 1994. "The embodiment of carbon in imports of manufactured products : Implications for international agreements on greenhouse gas emissions," Energy Policy, Elsevier, vol. 22(3), pages 187-194, March.
    10. Low, P., 1992. "International Trade and the Environment," World Bank - Discussion Papers 159, World Bank.
    11. Michael Lahr, 2001. "Reconciling Domestication Techniques, the Notion of Re-exports and Some Comments on Regional Accounting," Economic Systems Research, Taylor & Francis Journals, vol. 13(2), pages 165-179.
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    Citations

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    Cited by:

    1. Dinda, Soumyananda, 2006. "Globalization and Environment: Can Pollution Haven Hypothesis alone explain the impact of Globalization on Environment?," MPRA Paper 50590, University Library of Munich, Germany, revised 15 Oct 2006.
    2. Ling, Chong Hui & Ahmed, Khalid & Muhamad, Rusnah binti & Shahbaz, Muhammad, 2015. "Decomposing the trade-environment nexus for Malaysia: What do the technique, scale, composition and comparative advantage effect indicate?," MPRA Paper 67165, University Library of Munich, Germany, revised 09 Oct 2015.
    3. Pei, Jiansuo & Meng, Bo & Wang, Fei & Xue, Jinjun, 2015. "Production sharing, demand spillovers and CO2 emissions : the case of Chinese regions in GVCs," IDE Discussion Papers 493, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    4. Chris Milner & Fangya Xu, "undated". "On The Pollution Content of China’s Trade: Clearing the Air?," Discussion Papers 09/19, University of Nottingham, GEP.
    5. Dietzenbacher, Erik & Pei, Jiansuo & Yang, Cuihong, 2012. "Trade, production fragmentation, and China's carbon dioxide emissions," Journal of Environmental Economics and Management, Elsevier, vol. 64(1), pages 88-101.
    6. repec:eee:jpolmo:v:39:y:2017:i:6:p:1035-1051 is not listed on IDEAS
    7. Yilmaz BAYAR & Ömer Faruk OZTURK, 2016. "Trade Openness and Environmental Pollution in Emerging Market Economies," Eurasian Eononometrics, Statistics and Emprical Economics Journal, Eurasian Academy Of Sciences, vol. 3(3), pages 33-42, January.
    8. Audi, Marc & Ali, Amjad, 2018. "Determinants of Environmental Degradation under the Perspective of Globalization: A Panel Analysis of Selected MENA Nations," MPRA Paper 85776, University Library of Munich, Germany.
    9. Ning Chang, 2012. "The empirical relationship between openness and environmental pollution in China," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 55(6), pages 783-796, August.

    More about this item

    Keywords

    International trade; Environment; Pollution haven; Factor endowment; Inputoutput analysis.;

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis

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