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Did International Trade Become Dirtier in Developing Countries? On the Composition Effect of International Trade on the Environment

Author

Listed:
  • Yushi Yoshida

    () (Faculty of Economics, Kyushu Sangyo University)

  • Satoshi Honma

    () (Faculty of Economics, Kyushu Sangyo University)

Abstract

Utilizing the world panel dataset for the pollution emission embedded in international trade for the period between 1988 and 2009, we investigated whether the composition of international trade of a country moved away from pollution-intensive industries as its income level rises. The empirical evidence suggests that the income levels of countries are negatively related to export pollution intensity, but we also find that income is negatively related to import pollution intensity. Thus, the composition effect of international trade on the environment is only consistent with the pollution haven hypothesis on the export side, which predicts that developing countries export more of dirtier industries and import more of cleaner industries after trade liberalization. Further investigation reveals that the lower-middle income countries experienced an increase in the pollution emission of exports and a decrease in the pollution emission of imports, whereas the countries in the lowest income group experienced increases in the pollution emission embodied in both exports and imports.

Suggested Citation

  • Yushi Yoshida & Satoshi Honma, 2011. "Did International Trade Become Dirtier in Developing Countries? On the Composition Effect of International Trade on the Environment," Discussion Papers 52, Kyushu Sangyo University, Faculty of Economics.
  • Handle: RePEc:kyu:dpaper:52
    as

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    File URL: http://www.ip.kyusan-u.ac.jp/keizai-kiyo/dp52.pdf
    File Function: First version, 2011Dec
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    References listed on IDEAS

    as
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    5. Arik Levinson & M. Scott Taylor, 2008. "Unmasking The Pollution Haven Effect," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(1), pages 223-254, February.
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    Cited by:

    1. Debashis Chakraborty & Sacchidananda Mukherjee, 2013. "Do Trade and Investment Flows Lead to Higher CO2 Emissions? Some Panel Estimation Results," Working Papers 1321, Indian Institute of Foreign Trade.

    More about this item

    Keywords

    Composition effect; Environment; International trade; Pollution emission; Pollution haven hypothesis.;

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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