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

Jose Mendez () and Lewis R. Gale ()
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Jose Mendez: W. P. Carey School of Business Department of Economics, http://wpcarey.asu.edu/Directory/stafffaculty.cfm?cobid=1039569

Working Papers from Department of Economics, W. P. Carey School of Business, Arizona State University

Abstract: 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.

JEL-codes: Q2 O1 F1 (search for similar items in EconPapers)
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