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A Note on the Empirical Relationship Between Trade, Growth and the Environment

  • Lewis R. Gale
  • Jose A. Mendez

    ()

This note reestimates Grossman and Krueger�s (1993) SO2 emissions regression including regressors to capture the effects of scale, trade and trade policy. Several new results are obtained. Increases in economic activity have a negative effect on the environment separate from changes in per capita income, whose relation to the environment is now positive and linear not inverted- U shaped. The trade policy measure is not significant, but its effect is ambiguous a priori. Finally, in line with specialization patterns based on traditional sources of comparative advantage, pollution rises with the capital abundance of a country (since this favors capital-intensive and generally dirtier industries) and falls with increases in labor and land abundance.

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Paper provided by Arizona State University, Department of Economics in its series Working Papers with number 96/3.

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Handle: RePEc:wop:astewp:9603
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  1. Gene M. Grossman & Alan B. Krueger, 1991. "Environmental Impacts of a North American Free Trade Agreement," NBER Working Papers 3914, National Bureau of Economic Research, Inc.
  2. Grossman, Gene, 1993. "Pollution and Growth: What Do We Know?," CEPR Discussion Papers 848, C.E.P.R. Discussion Papers.
  3. Copeland, Brian R & Taylor, M Scott, 1994. "North-South Trade and the Environment," The Quarterly Journal of Economics, MIT Press, vol. 109(3), pages 755-87, August.
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