Environmental Engineering Reference
In-Depth Information
economy is largely ambiguous. Cole (2007) reports that more corrupt countries have a
worse environmental record than countries with less corruption. Thus there are a myriad
of factors that may in
fl
uence increased demand for environmental regulation as incomes
rise.
EKC and trade
The EKC provides a framework with which to test the role of trade in the economic
growth and environment relationship as well. Similar to the debate on economic
growth, the debate on trade is typically divided between the so-called optimists and pes-
simists who believe that trade as a driver of economic growth is either good or bad for
the environment (see, e.g., Bhagwati, 1993; Daly, 1993). Studies have found that the
EKC inverted-U relationship may be a result of the changing scale, composition and
technique patterns that appear to accompany liberalized trade and economic growth
(Grossman and Krueger 1993; 1995; Heil and Selden, 2001; Suri and Chapman, 1998).
However, these structural changes from heavy industry towards services in the now rich
countries may be a result of the South's specialization in the extraction of natural
resources and the production of labor- and pollution-intensive goods (Stern, 1998).
The fact that developed countries may now be importing their pollution-intensive
output from the developing world may therefore explain the reductions in local air pol-
lution experienced in most developed countries in recent years (Cole and Neumayer,
2005).
The pollution haven hypothesis, as previously mentioned, is one attempt to explain
these changes in trade patterns. It claims that less stringent regulation in developing coun-
tries will provide them with a comparative advantage in the production of pollution-
intensive goods over developed countries (Cole, 2004). Therefore the North will specialize
in clean production but the South in pollution-intensive production. However, the data
are mixed. Some studies
nd no evidence to suggest that the stringency of a country's envi-
ronmental regulation signi
fi
fi
cantly impacts on competitiveness of pollution-intensive
fi
e et al.,1995; Jänicke et al., 1997), whereas others have found some evidence of
pollution haven pressures (Antweiler et al., 2001; Cole and Elliott, 2003; 2005). Cole
(2004) examined North-South trade
rms (Ja
ff
fl
ows for pollution-intensive products, and found
evidence of pollution haven e
nd they were widespread. In fact, he
found that they may be small compared to other EKC explanatory variables such as
increased demand for environmental regulations, increased investment in abatement tech-
nologies, trade openness, structural change away from manufacturing, and increased
imports of pollution-intensive outputs.
The e
ff
ects, but did not
fi
ff
ect of trade on the environment is not restricted to potential pollution haven
e
ff
ects, however. Indeed, there is some evidence that trade openness may have bene
fi
cial
e
ects on the environment as well. Neumayer (2002c) reports evidence suggesting that
countries more open to foreign trade have a higher likelihood of ratifying multilateral
environmental agreements. Perkins and Neumayer (2008) examine the claim that
outward orientation helps countries to reduce their pollution intensity, that is the
amount of pollution generated per unit of GDP. They
ff
nd that countries that import a
larger share of their machinery and manufactured goods from countries with lower pol-
lution intensity manage to lower their CO
2
and SO
2
pollution intensity faster than
others.
fi
