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

Author

Listed:
  • Yushi Yoshida

    (Faculty of Economics, Kyushu Sangyo University)

  • Satoshi Honma

    (Faculty of Economics, Kyushu Sangyo University)

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.

Suggested Citation

  • Yushi Yoshida & Satoshi Honma, 2011. "Did International Trade Become Dirtier in Developing Countries? On the Composition Effect of International Trade on the Environment," Discussion Papers 52, Kyushu Sangyo University, Faculty of Economics.
    • Handle: RePEc:kyu:dpaper:52
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    File URL: http://www.ip.kyusan-u.ac.jp/keizai-kiyo/dp52.pdf
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    References listed on IDEAS

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    Cited by:

    1. Mai T. T. Tran & Christopher Gan & Baiding Hu, 2019. "Impacts of Trade Liberalisation on CO2 Emissions in Vietnam," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 18(3), pages 265-286, December.
    2. Debashis Chakraborty & Sacchidananda Mukherjee, 2013. "Do Trade and Investment Flows Lead to Higher CO2 Emissions? Some Panel Estimation Results," Working Papers 1321, Indian Institute of Foreign Trade.

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    More about this item

    Keywords

    Composition effect; Environment; International trade; Pollution emission; Pollution haven hypothesis.;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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