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A multi-regional input–output analysis of the pollution haven hypothesis from the perspective of global production fragmentation

Zengkai Zhang, Kunfu Zhu () and Geoffrey Hewings

Energy Economics, 2017, vol. 64, issue C, 13-23

Abstract: Pollution haven hypothesis is an important debate on the environmental effects of international trade, the pattern of which has been reshaped obviously by global production fragmentation recently. The production process is distributed globally, and the pollution haven effect of international trade is becoming more complicated. For instance, intermediate product trade corresponds to the largest share of embodied emissions, and the share of emissions induced by the global value chain related trade is increasing gradually. The aim of this paper is to make a comprehensive analysis on the pollution haven hypothesis in carbon emissions embodied in three different trade patterns from global, bilateral, and national perspectives. We propose a method to parcel the pollution haven hypothesis in a multi-regional input–output analysis and discuss the contribution of production fragmentation for global emissions. It is found that international production fragmentation generates global emissions savings. The intermediate product trade has a negative balance of avoided emissions. The final product trade becomes increasingly less environmentally effective during the period 1995–2009. There are significant differences in the environmental effects of different trade patterns for each country.

Keywords: Pollution haven hypothesis; Production fragmentation; Input–output analysis (search for similar items in EconPapers)
JEL-codes: C67 Q43 Q54 Q56 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1016/j.eneco.2017.03.007

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