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2001), "Is Free Trade Good for the Environment
- American Economic Review
"... This paper investigates how openness to international goods markets affects pollution concentrations. We develop a theoretical model to divide trade’s impact on pollution into scale, technique and composition effects and then examine this theory using data on sulfur dioxide concentrations from the G ..."
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Cited by 217 (4 self)
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This paper investigates how openness to international goods markets affects pollution concentrations. We develop a theoretical model to divide trade’s impact on pollution into scale, technique and composition effects and then examine this theory using data on sulfur dioxide concentrations from the Global Environment Monitoring Project. We find international trade creates relatively small changes in pollution concentrations when it alters the composition, and hence the pollution intensity, of national output. Our esti-mates of the associated technique and scale effects created by trade imply a net reduction in pollution from these sources. Combining our estimates of scale, composition and tech-nique effects yields a somewhat surprising conclusion: freer trade appears to be good for the environment. (JEL F11, Q25) The debate over the role international trade plays in determining environmental outcomes has at times generated more heat than light. The-oretical work has been successful in identify-ing a series of hypotheses linking openness to
Economic growth and the environment
- Quarterly Journal of Economics
, 1995
"... you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact inform ..."
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Cited by 193 (0 self)
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you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at
Strategic environmental policy and international trade
- Journal of International Economics
, 1985
"... This paper demonstrates that governments may have incentives to impose weak environmental standards on industries that compete for business in imperfectly competitive international markets, where ‘weak ’ means that the marginal cost of abatement is less than the marginal damage from pollution. Howev ..."
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Cited by 129 (0 self)
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This paper demonstrates that governments may have incentives to impose weak environmental standards on industries that compete for business in imperfectly competitive international markets, where ‘weak ’ means that the marginal cost of abatement is less than the marginal damage from pollution. However, such an intervention is not as efficient as an export or R&D subsidy in improving competitiveness, and depending on the form of competition and market structure, it may instead be optimal for governments to impose strong environmental standards, where ‘strong ’ means that the marginal cost of abatement exceeds the marginal environmental damage. The existence of less strict environmental standards in a lower income country... is not a sufficient basis for claiming that the environmental standards are ‘too low ’ or that the country is manipulating its environmental standards in order to improve the competitiveness of its producers. To substantiate such a claim, it would be necessary at the very least to demonstrate that the standards are even lower than would be expected on the basis of such factors as the level of per capita income and the characteristics of the physical environment. Clearly, that would be very difficult to do. Moreover, the charge might also be aimed at highly developed countries in which stringent environmental standards may have been adopted in some areas but where, because of competitiveness considerations, governments have shied away from high standards in others. [GATT (1992, p. 29)]. 1.
The rise and fall of the environmental kuznets curve
- World Development
"... This paper chronicles the story of the environmental Kuznets curve (EKC). The EKC proposes that indicators of environmental degradation first rise, and then fall with increasing income per capita. However, recent evidence shows that developing countries are addressing environmental issues, sometimes ..."
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Cited by 111 (2 self)
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This paper chronicles the story of the environmental Kuznets curve (EKC). The EKC proposes that indicators of environmental degradation first rise, and then fall with increasing income per capita. However, recent evidence shows that developing countries are addressing environmental issues, sometimes adopting developed country standards with a short time lag and sometimes performing better than some wealthy countries, and that the EKC results have a very flimsy statistical foundation. A new generation of decomposition models can help disentangle the true relations between development and the environment.
Life During Growth
- Journal of Economic Growth
, 1999
"... Abstract: A remarkable diversity of indicators shows quality of life across nations to be positively associated with per capita income. At the same time, the changes in quality of life as income grows are surprisingly uneven. Either in levels or changes, moreover, the effect of exogenous shifts over ..."
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Cited by 101 (2 self)
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Abstract: A remarkable diversity of indicators shows quality of life across nations to be positively associated with per capita income. At the same time, the changes in quality of life as income grows are surprisingly uneven. Either in levels or changes, moreover, the effect of exogenous shifts over time is surprisingly strong compared to growth effects. This paper reaches this conclusion with a panel dataset of 81 indicators covering up to 4 time periods (1960, 1970, 1980, and 1990). The indicators cover 7 subjects: (1) individual rights and democracy, (2) political instability and war, (3) education, (4) health, (5) transport and communications, (6) inequality across class and gender, and (7) “bads. ” With a SUR estimator in levels, income per capita has an impact on the quality of life that is significant, positive, and more important than exogenous shifts for 32 out of 81 indicators. With a fixed effects estimator, growth has an impact on the quality of life that is significant, positive, and more important than exogenous shifts for 10 out of 81 indicators. With a first-differences IV estimator, growth has a causal impact on the quality of life that is significant, positive, and more important than exogenous shifts for 6 out of 69 quality of life indicators. The conclusion speculates about such explanations for the pattern of results as: (1) the long and variable lags that may come between growth and changes in the quality of life, and (2) the possibility that global socioeconomic progress is more important than home country growth for many quality of life indicators. 1 I acknowledge assistance on data collection and organization from a fortuitous succession of two hardworking
Is Trade Good or Bad for the Environment? Sorting out the Causality
- Review of Economics and Statistics
"... We seek to contribute to the debate over globalization and the environment by asking: What is the effect of trade on a country’s environment, for a given level of GDP? We take specific account of the endogeneity of trade, using exogenous geographic determinants of trade as instrumental variables. We ..."
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Cited by 98 (10 self)
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We seek to contribute to the debate over globalization and the environment by asking: What is the effect of trade on a country’s environment, for a given level of GDP? We take specific account of the endogeneity of trade, using exogenous geographic determinants of trade as instrumental variables. We find that trade tends to reduce three measures of air pollution. Statistical significance is high for concentrations of SO2, moderate for NO2, and lacking for particulate matter. While results for other environmental measures are not as encouraging, there is little evidence that trade has a detrimental effect on the environment.
Trade, Growth and the Environment
, 2003
"... For the last ten years environmentalists and the trade policy community have engaged in a heated debate over the environmental consequences of liberalized trade. The debate was originally fueled by negotiations over the North American Free Trade Agreement and the Uruguay round of GATT negotiations, ..."
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Cited by 84 (2 self)
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For the last ten years environmentalists and the trade policy community have engaged in a heated debate over the environmental consequences of liberalized trade. The debate was originally fueled by negotiations over the North American Free Trade Agreement and the Uruguay round of GATT negotiations, both of which occurred at a time when concerns over global warming, species extinction and industrial pollution were rising. Recently it has been intensified by the creation of the World Trade Organization (WTO) and proposals for future rounds of trade negotiations. The debate has often been unproductive. It has been hampered by the lack of a common language and also suffered from little recourse to economic theory and empirical evidence. The purpose of this essay is set out what we currently know about the environmental consequences of economic growth and international trade. We critically review both theory and empirical work to answer three basic questions. What do we know about the relationship between international trade, economic growth and the environment? How can this evidence help us evaluate ongoing policy debates? Where do we go from here?
Is there an environmental Kuznets curve for sulfur
- Journal of Environmental Economics and Environmental Management
, 2001
"... The environmental Kuznets curve (EKC) hypothesis proposes that there is an inverted U-shape relation between environmental degradation and income per capita. Various explanations for this phenomenon have been put forward and some authors argue that important explanatory variables are omitted from co ..."
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Cited by 68 (7 self)
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The environmental Kuznets curve (EKC) hypothesis proposes that there is an inverted U-shape relation between environmental degradation and income per capita. Various explanations for this phenomenon have been put forward and some authors argue that important explanatory variables are omitted from conventional EKC estimates. Inclusion of these omitted variables is argued to increase the estimated "turning point "- the level of GDP per capita above which environmental degradation is declining. In this paper we use a new cross-section/time-series data base of sulfur emissions for a wide range of developed and developing countries. The methodology involves estimating EKCs for subsets of this database as well as for the sample as a whole. The results show that estimating an EKC using data for only the OECD countries, as has often been the case, leads to estimates where the turning point is at a much lower level than when the EKC is estimated using data for the World as a whole. The paper explores possible explanations of these results using Monte Carlo analysis, and other statistical tests.We conclude that the simple EKC model is fundamentally misspecified and that there are omitted variables which are correlated with GDP.
