Have Countries with Lax Environmental Regulations a Comparative Advantage in Polluting Industries?
Authors:
Miguel Quiroga, Thomas Sterner, and Martin Persson
Summary:
We study whether lax environmental regulations induce comparative advantages, causing the least-regulated countries to specialize in polluting industries. The study is based on the Trefler and Zhu [24] definition of the factor content of trade. For the econometrical analysis, we use a cross-section of 71 countries to examine the net exports in the most polluting industries in the year 2000. We try to overcome three areas 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 find that industrial aggregation matters and we do find some evidence in favor of the pollution haven effect.
Date:
2008
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Updated: 2010-04-15