Some Evidence for Pollution Havens

Miguel Quiroga, Thomas Sterner, and Martin Persson find evidence that "lax environmental regulations induce comparative advantages, causing the least-regulated countries to specialize in polluting industries.": Have Countries with Lax Environmental Regulations a Comparative Advantage in Polluting Industries?

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.

Hat Tip: Research paper review - "Globalisation and the Envuironment"

Comments

[Todd Tucker]

Thanks for pointing this out. Very useful.

[man hair loss]

thanks for posting this! :)