Did International Trade Become Dirtier in Developing Countries? On the Composition Effect of International Trade on the Environment

Yushi Yoshida and Satoshi Honma

No 52, Discussion Papers from Kyushu Sangyo University, Faculty of Economics

Abstract: Utilizing the world panel dataset for the pollution emission embedded in international trade for the period between 1988 and 2009, we investigated whether the composition of international trade of a country moved away from pollution-intensive industries as its income level rises. The empirical evidence suggests that the income levels of countries are negatively related to export pollution intensity, but we also find that income is negatively related to import pollution intensity. Thus, the composition effect of international trade on the environment is only consistent with the pollution haven hypothesis on the export side, which predicts that developing countries export more of dirtier industries and import more of cleaner industries after trade liberalization. Further investigation reveals that the lower-middle income countries experienced an increase in the pollution emission of exports and a decrease in the pollution emission of imports, whereas the countries in the lowest income group experienced increases in the pollution emission embodied in both exports and imports.

Keywords: Composition effect; Environment; International trade; Pollution emission; Pollution haven hypothesis. (search for similar items in EconPapers)
JEL-codes: F18 O13 Q56 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2011-12
New Economics Papers: this item is included in nep-env and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:kyu:dpaper:52

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