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Pollution Haven Hypothesis and the Role of Dirty Industries in Turkey’s Exports

  • Elif Akbostanci

    ()

    (Department of Economics, METU)

  • G.Ipek Tunç

    ()

    (Department of Economics, METU)

  • Serap Türüt-Asik

    ()

    (Department of Economics, METU)

Registered author(s):

    Pollution haven hypothesis argues that the industries that are highly pollution intensive i.e. dirty industries, have been migrating from developed economies to the developing world. It is argued that the environmental concerns of the developed economies caused them to enact strict environmental regulations, which have increased the cost of production of the dirty industries at home. On the other hand, the developing countries with their low wages and lax environmental regulations have been attractive alternative producers in these sectors. At the same time this migration is also beneficial for developing countries that are in need of financial resources for industrial development. Consequently, developing countries provide pollution havens for dirty industries. In this process while the dirty industries have been migrating to the developing countries, the developed countries also have become net importers of these sectors. In this study the pollution haven argument for Turkey, for 1994-1997 period is examined. The study focuses on the pollution haven hypothesis from trade perspective by looking at the manufacturing industry data at 4-digit ISIC detail by using the panel data approach. It is found that exports increase as the dirtiness of the industries increases, providing some evidence for the pollution haven hypothesis.

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    File URL: http://www.erc.metu.edu.tr/menu/series04/0403.pdf
    File Function: First version, 2004
    Download Restriction: no

    Paper provided by ERC - Economic Research Center, Middle East Technical University in its series ERC Working Papers with number 0403.

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    Length: 17 pages
    Date of creation: Feb 2004
    Date of revision: Feb 2004
    Handle: RePEc:met:wpaper:0403
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    Web page: http://www.erc.metu.edu.tr
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    1. Larson, Bruce A. & Nicolaides, Eri & Al Zu'bi, Bashir & Sukkar, Nabil & Laraki, Karim & Matoussi, Mohamed Salah & Zaim, Katalin & Chouchani, Carol, 2002. "The Impact of Environmental Regulations on Exports: Case Study Results from Cyprus, Jordan, Morocco, Syria, Tunisia, and Turkey," World Development, Elsevier, vol. 30(6), pages 1057-1072, June.
    2. Xinpeng Xu, 2000. "International Trade and Environmental Regulation: Time Series Evidence and Cross Section Test," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 17(3), pages 233-257, November.
    3. Brian R. Copeland & M. Scott Taylor, 2004. "Trade, Growth, and the Environment," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 7-71, March.
    4. Eskeland, Gunnar S. & Harrison, Ann E., 1997. "Moving to greener pastures : multinationals and the pollution-haven hypothesis," Policy Research Working Paper Series 1744, The World Bank.
    5. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers 185, Massachusetts Institute of Technology (MIT), Department of Economics.
    6. Haixiao Huang, Walter C. Labys, 2002. "Environment and trade: a review of issues and methods," International Journal of Global Environmental Issues, Inderscience Enterprises Ltd, vol. 2(1/2), pages 100-160.
    7. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
    8. Wilson, John S. & Tsunehiro Otsuki & Sewadeh, Mirvat, 2002. "Dirty exports and environmental regulation : do standards matter to trade?," Policy Research Working Paper Series 2806, The World Bank.
    9. Revesz, Richard L. & Stavins, Robert N., 2007. "Environmental Law," Handbook of Law and Economics, Elsevier.
    10. Yuquing Xing & Charles Kolstad, 2002. "Do Lax Environmental Regulations Attract Foreign Investment?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 21(1), pages 1-22, January.
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