Application of Pollution Haven Hypothesis in Identifying Dirty Industries Evidence of Iran-China Commercial Relationship

Reza Akhbari (), Hamid Amadeh and Mina Alemzadeh
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Hamid Amadeh: Faculty of Management and Economics, Islamic Azad University, Iran.
Mina Alemzadeh: Faculty of Management and Economics, Islamic Azad University, Iran.

Bulletin of Energy Economics (BEE), 2016, vol. 4, issue 1, 1-11

Abstract: In all societies, economic growth and development are followed as positive goals. However, they have negative effects in other fields such as environment. In recent years, discussions about externalities of globalization and free trade have shaped, proposing the pollution haven hypothesis (PHH) and thereby revealing the massive share of trade and the importance of globalization in transferring pollutants. We have used the ARDL approach to cointegration to identify long run relationships between variables in the PHH models about Iran-China trade relationship on time series data (1987 to 2004). We separate dirty industries from green ones by ISIC codes. We present models for each ISIC codes and one model to examine whether the PHH could still be true if all dirty industries were aggregated. Results show that EKC is N-shaped and the share of manufacturing products in CO2 emission is enormous but output of our estimation didn’t support the PHH in aggregated model although in detailed models, such as models with 34 and 35 ISIC codes, the existence of PHH cannot be rejected.

Keywords: Pollution Haven Hypothesis; Trade; EKC; ARDL (search for similar items in EconPapers)
JEL-codes: C22 F18 Q56 (search for similar items in EconPapers)
Date: 2016
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