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Unravelling the Worldwide Pollution Haven Effect

Jean-Marie Grether, Nicole Mathys and Jaime de Melo ()

No 2011.75, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This paper tackles the “pollution haven” argument by estimating the pollution content of imports (PCI). The PCI is then decomposed into three components: (i) a “deep” component (i.e. traditional variables unrelated to the environmental debate); (ii) a factor endowment component and (iii) a “pollution haven” component reflecting the impact of differences in environmental policies. The estimation is carried out for 1987 for an extensive data set covering 10 pollutants, 48 countries and 79 ISIC 4-digit sectors. Decompositions based on cross-section econometric estimates suggest a significant pollution haven effect which increases the PCI of the North because of stricter environmental regulations in the North. At the same time, the factor endowment effect lowers the PCI of the North, as the North is relatively well-endowed in capital and pollution-intensive activities are capital intensive. On a global scale, because the bulk of trade is intra-regional with a high North-North share, these effects are small relative to the “deep” determinants of the worldwide PCI. In sum, differences in factor endowments and environmental policies have only marginally affected the PCI of world trade at the end of the eighties.

Keywords: Trade and The Environment; Pollution Haven Effect; Factor Endowment Effect (search for similar items in EconPapers)
JEL-codes: F18 Q56 (search for similar items in EconPapers)
Date: 2011-10
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

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https://www.feem.it/m/publications_pages/NDL2011-075.pdf (application/pdf)

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Chapter: Unravelling the Worldwide Pollution Haven Effect (2015) Downloads
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Working Paper: Unraveling the World-Wide Pollution Haven Effect (2006) Downloads
Working Paper: Unraveling the worldwide pollution haven effect (2006) Downloads
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