Trade, the Pollution Haven Hypothesis and the

Environmental Kuznets Curve: Examining the Linkages

 

Matthew A. Cole

Department of Economics, University of Birmingham, Edgbaston,

Birmingham, B15 2TT, United Kingdom, Tel. 44 (0)121 414 6639, Fax. 44 (0)121 414 7377, E-mail m.a.cole@bham.ac.uk

 

Abstract

This paper examines the extent to which the EKC inverted U relationship can be explained by trade and specifically the migration or displacement of ‘dirty’ industries from the developed regions to the developing regions (the pollution haven hypothesis (PHH)). Using detailed data on North-South trade flows for pollution intensive products the evidence for the PHH is assessed. Emissions of 10 air and water pollutants are then estimated, controlling for trade openness, structural change and ‘dirty’ North-South trade flows. Evidence of pollution haven effects is found, although such effects do not appear to be widespread and appear to be relatively small compared to the roles played other explanatory variables.

 

 

JEL Classification: O10, O13, F18, Q25

 

Keywords: Economic growth, Trade, Environmental Degradation, Pollution Haven Hypothesis, Environmental Kuznets Curves.

 

I would like to thank Kenichi Shimamoto for very helpful research assistance and also gratefully acknowledge the support of ESRC grant number RES-000-22-0016.