Have Countries with Lax Environmental Regulations a Comparative Advantage in Polluting Industries?

Miguel Quiroga Suazo, Thomas Sterner and Martin Persson ()
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Martin Persson: department of Energy and Environment, Chalmers University of Technology, Gothenburg

No 412, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: We aim to study whether lax environmental regulations induce comparative advantages, causing the least-regulated countries to specialize in polluting industries. The study is based on Trefler and Zhu’s (2005) definition of the factor content of trade. For the econometrical analysis, we use a cross-section of 71 countries in 2000 to examine the net exports in the most polluting industries. We try to overcome three weaknesses in the empirical literature: the measurement of environmental endowments or environmental stringency, the possible endogeneity of the explanatory variables, and the influence of the industrial level of aggregation. As a result, we do find some evidence in favor of the pollution-haven effect. The exogeneity of the environmental endowments was rejected in several industries, and we also find that industrial aggregation matters.

Keywords: comparative advantage; environmental regulation; trade; pollution haven; Porter hypothesis (search for similar items in EconPapers)
JEL-codes: F18 Q56 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2009-12-04
New Economics Papers: this item is included in nep-env, nep-int, nep-reg and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published as Quiroga, Miguel, Thomas Sterner and Martin Persson, 'Have Countries with Lax Environmental Regulations a Comparative Advantage in Polluting Industries?' in RFF Discussion Paper Series, RFF DP07-08, 2007, pages 38.

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Working Paper: Have Countries with Lax Environmental Regulations a Comparative Advantage in Polluting Industries? (2007)
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