Trade, the pollution haven hypothesis and the environmental kuznets curve: examining the linkages

This paper examines the extent to which the EKC inverted U relationship can be explained by trade and specifically the migration or displacement of 'dirty' industries from the developed regions to the developing regions (the pollution haven hypothesis (PHH)). Using detailed data on North-South trade flows for pollution intensive products the evidence for the PHH is assessed. Emissions of 10 air and water pollutants are then estimated, controlling for trade openness, structural change and 'dirty' North-South trade flows. Evidence of pollution haven effects is found, although such effects do not appear to be widespread and appear to be relatively small compared to the roles played other explanatory variables. (C) 2003 Elsevier B.V. All rights reserved.