Pollution haven hypothesis and India's intra-industry trade: an analysis

Paramita Dasgupta and Kakali Mukhopadhyay

International Journal of Innovation and Sustainable Development, 2018, vol. 12, issue 3, 287-307

Abstract: With the adoption of trade liberalisation measures India's merchandised trade has expanded considerably in post-1991. One of the important factors of such commendable growth is the significant expansion in India's Intra-industry Trade. Given this circumstance, it is an important task to find out whether such rapid growth in Intra-industry Trade (IIT) has any detrimental effect on the environment. With this purpose, the current paper measures the shares of pollution content of India's 'inter-industry trade' and 'IIT', and its impact on the environment by using Input-Output framework for the period 2001-2002 to 2011-2012. Applying the Grubel-Lloyd index the paper estimates the shares of IIT including Vertical and Horizontal in India's total trade with the USA and the EU-27. It observes that the Vertical IIT is dominant over those of the Horizontal IIT and export in IIT is highly pollution intensive. Above all, the results of Pollution terms of trade provide stronger evidence on the pollution haven effect.

Keywords: intra-industry trade; vertical IIT; horizontal IIT; input-output technique; Grubel-Llyod index; pollution haven hypothesis; pollution terms of trade; India's foreign trade; liberalisation of India. (search for similar items in EconPapers)
Date: 2018
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