Grether, Jean-Marie Mathys, Nicole A. de Melo, Jaime
Year of Publication:
Nota di Lavoro, Fondazione Eni Enrico Mattei 122.2006
This paper contributes to the debate on the existence of pollution haven effects by systematically measuring the pollution content of trade (measured by the polluction content of imports (PCI)) and decomposing it into three components: a deep (i.e. unrelated to the environmental debate) component and two components (factor endowments and environmental policies) that occupy centerstage in the debate on trade and the environment. The decomposition is carried out for 1986-88 for an extensive data set covering 10 pollutants, 48 countries and 79 ISIC 4-digit sectors. Illustrative decompositions presented for 3 of the 10 pollutants in the data set indicate a significant pollution haven effect and highlight the role of factor endowments in each regions PCI. However, because the bulk of trade is intra-regional with a high North-North share, these effects are small relative to the deep determinants of the worldwide pollution content of trade.