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Testing the validity of the pollution haven hypothesis for regionally leading emerging economies

Year 2021, Volume: 14 Issue: 4, 1307 - 1327, 13.10.2021
https://doi.org/10.25287/ohuiibf.864956

Abstract

This study tests the validity of the Pollution Haven Hypothesis (PHH) for the case of six emerging industrial economies with a relatively higher competitive industrial performance compared to the other developing countries in their region. The sampled countries are China (East Asia), Poland (Europe), Mexico (Latin America), India (South Asia), South Africa (Africa), and Turkey (Europe and the Middle East). The study adopts a Revealed Comparative Advantage (RCA) approach to the Pollution-Intensive Industrial Products (PIIPs) and differs from many relevant studies by grouping PIIPs and distinguishing a wide range set of factors between those that directly affect the RCA in PIIPs and those that have indirect effects through attracting Foreign Direct Investment (FDI). Estimations of random-effects models over the period 1995-2018 provide weak support for the validity of PHH: Despite inward FDI stocks are positively associated with the RCA indices of higher polluting industries, the environmental policy elasticity of inward FDI stocks is slight and insignificant. The study argues that the evidence of the PHH may change over proxies, measurements, model construction, and (more importantly) the classification of PIIPs that should be considered by future studies while analyzing the PHH.

References

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Bölgesel önde gelen yükselen ekonomiler için kirlilik sığınağı hipotezinin geçerliliğinin testi

Year 2021, Volume: 14 Issue: 4, 1307 - 1327, 13.10.2021
https://doi.org/10.25287/ohuiibf.864956

Abstract

Bu çalışma, Kirlilik Sığınağı Hipotezi (KSH)’nin geçerliliğini, bölgelerindeki diğer gelişmekte olan ülkelere kıyasla daha yüksek rekabetçi sanayi performansına sahip altı yükselen sanayi ekonomisi için test etmektedir. Çalışmanın örneklemini Çin (Doğu Asya), Polonya (Avrupa), Meksika (Latin Amerika), Hindistan (Güney Asya), Güney Afrika (Afrika) ve Türkiye (Avrupa ve Orta Doğu) oluşturmaktadır. Kirlilik-Yoğun Sanayi Ürünlerindeki (KYSÜ) rekabetçilik performansını açıklanmış karşılaştırmalı üstünlük yaklaşımıyla belirleyen çalışma, KYSÜ’leri kirlilik yoğunlukları bakımından gruplayarak çok sayıda faktörü KYSÜ’lerdeki karşılaştırmalı üstünlükleri doğrudan ve dolaylı (Doğrudan Yabancı Sermaye Yatırımları (DYY)’nı çekerek) etkileyen faktörler olarak ayırması bakımından daha önceki çalışmaların çoğundan farklılaşmaktadır. 1995-2018 dönemi için tesadüfi-etkiler model tahminleri, KSH’nin geçerliliğini zayıf bir biçimde desteklemektedir: Her ne kadar yurtiçine gelen DYY stokları yüksek kirliliğe sahip sanayiler için hesaplanan açıklanmış karşılaştırmalı üstünlük endeksleri ile pozitif ilişkide olsa da DYY stoklarının çevre politikaları esnekliği düşük ve istatistiki olarak anlamsız bulunmuştur. Çalışma, KSH bulgularının gösterge değişkenlere, bu değişkenlerin ölçümlerine, model kurgularına ve (daha önemlisi) KYSÜ’lerin kirlilik yoğunlukları bakımından sınıflandırılmasına bağlı olarak değişebileceğini, bu nedenle KSH’yi test edecek ileriki çalışmaların bu hususları dikkate almaları gerektiğini ortaya koymaktadır.

References

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  • Akbostancı, E., Tunç, G. I. & Türüt-Aşık, S. (2007). Pollution haven hypothesis and the role of dirty industries in Turkey's exports. Environment and Development Economics, 12(2), 297–322. https://doi.org/10.1017/S1355770X06003512
  • Alcalá, F. & Ciccone, A. (2004). Trade and productivity. The Quarterly Journal of Economics, 119(2), 613–646. https://doi.org/10.1162/0033553041382139
  • Barro, R.J. & Sala-i-Martin, X. (1997). Technological diffusion, convergence, and growth. Journal of Economic Growth, 2, 1-26. https://doi.org/10.1023/A:1009746629269
  • Birdsall, N. & Wheeler, D. (1993). Trade policy and industrial pollution in Latin America: Where are the pollution havens? The Journal of Environment & Development, 2(1), 137–149. https://doi.org/10.1177/107049659300200107
  • Botta, E. & Kozluk, T. (2014). Measuring environmental policy stringency in OECD countries: A composite index approach. OECD Economics Department Working Papers, 1177, OECD Publishing, Paris. http://dx.doi.org/10.1787/5jxrjnc45gvg-en
  • Boulhol, H. & Fontagné, L. (2005). Deindustrialisation and the fear of relocations in the industry. Retrieved from https://www.oecd.org/sti/sci-tech/35333677.pdf
  • Broner, F., Bustos, P. & Carvalho, V. M. (2016). Sources of comparative advantage in polluting industries. Retrieved from http://www.crei.cat/wp-content/uploads/2017/02/SCAPI-1.pdf
  • Brunnermeier S.B. & Levinson, A. (2004). Examining the evidence on environmental regulations and industry location. The Journal of Environment & Development. 13(1), 6–41. https://doi.org/10.1177/1070496503256500
  • Busse, M. (2004). Trade, environmental regulations and the World Trade Organization: New empirical evidence. World Bank Policy Research Working Papers, 3361. https://doi.org/10.1596/1813-9450-3361
  • Cerdeiro, D.A. & Komaromi, A. (2020). Trade and income in the long run: Are there really gains, and are they widely shared? Review of International Economics, (Early View), 1–29. https://doi.org/10.1111/roie.12494
  • Cherniwchan, J. (2012). Economic growth, industrialization, and the environment. Resource and Energy Economics, 34(4), 442–467. https://doi.org/10.1016/j.reseneeco.2012.04.004
  • Choudhri, E. & Hakura, D. (2000). International trade and productivity growth: Exploring the sectoral effects for developing countries. IMF Staff Papers, 47(1), 30–53.
  • Cole, M. A. (2004). Trade, the pollution haven hypothesis and the environmental Kuznets curve: Examining the linkages. Ecological Economics, 48(1), 71–81. https://doi.org/10.1016/j.ecolecon.2003.09.007
  • Dasgupta, P. & Mukhopadhyay, K. (2018). Pollution haven hypothesis and India's intra-industry trade: An analysis. International Journal of Innovation and Sustainable Development, 12(3), 287–307. https://doi.org/10.1504/IJISD.2018.091538
  • Da Silva, C. G., Vieira, F. V. & Saiani, C. C. S. (2019). Environmental Kuznets curve, pollution haven hypothesis and business cycles: Evidence from BRICS countries. International Journal of Ecological Economics and Statistics, 40(2), 49–66.
  • Dean, J.M. (2002). Does trade liberalization harm the environment? A new test. Canadian Journal of Economics/Revue canadienne d'économique, 35(4), 819–842. https://doi.org/10.1111/0008-4085.00155
  • Dean, J. M., Lovely, M. E. & Wang, H. (2009). Are foreign investors attracted to weak environmental regulations? Evaluating the evidence from China. Journal of Development Economics, 90(1), 1–13. https://doi.org/10.1016/j.jdeveco.2008.11.007
  • Destek, M.A. & Okumuş, I. (2019). Does pollution haven hypothesis hold in newly industrialized countries? Evidence from ecological footprint. Environmental Science and Pollution Research, 26, 23689–23695. https://doi.org/10.1007/s11356-019-05614-z
  • Dietzenbacher, E. & Mukhopadhyay, K. (2007). An empirical examination of the pollution haven hypothesis for India: towards a green Leontief paradox? Environmental and Resource Economics, 36, 427–449. https://doi.org/10.1007/s10640-006-9036-9
  • Dong, B., Gong, J. & Zhao, X. (2012). FDI and environmental regulation: Pollution haven or a race to the top. Journal of Regulatory Economics, 41(2), 216–237. https://doi.org/10.1007/s11149-011-9162-3
  • Doytch, N. & Uctum, M. (2016). Globalization and the environmental impact of sectoral FDI. Economic Systems, 40(4), 582–594. https://doi.org/10.1016/j.ecosys.2016.02.005
  • D’Souza, C. & Peretiatko, R. (2002). The nexus between industrialization and environment: A case study of Indian enterprises. Environmental Management and Health, 13(1), 80–97. https://doi.org/10.1108/09566160210417859
  • Edwards, S. (1993). Openness, trade liberalization, and growth in developing countries. Journal of Economic Literature, 31(3), 1358–1393.
  • Eskeland, G. S. & Harrison, A. E. (2003). Moving to greener pastures? Multinationals and the pollution haven hypothesis. Journal of Development Economics, 70(1), 1–23. https://doi.org/10.1016/S0304-3878(02)00084-6
  • Feldstein, M. (2000). Aspects of global economic integration: Outlook for the future. NBER Working Papers, 7899. http://dx.doi.org/10.3386/w7899
  • Frankel, A. J. & Romer, D. (1999). Does trade cause growth? American Economic Review, 89(3), 379–399. http://dx.doi.org/10.1257/aer.89.3.379
  • Garsous, G. & Kozluk, T. (2017). Foreign direct investment and the pollution haven hypothesis: Evidence from listed firms. OECD Economics Department Working Papers, 1379, Paris: OECD Publishing. https://doi.org/10.1787/1e8c0031-en
  • GGDC-Groningen Growth and Development Centre (2020). Penn World Table version 9.1. Retrieved from www.ggdc.net/pwt https://doi.org/10.15141/S50T0R
  • Grether, J. M., Mathys, N. A. & de Melo, J. (2012). Unravelling the worldwide pollution haven effect. The Journal of International Trade & Economic Development, 21(1), 131–162. https://doi.org/10.1080/09638190903552040
  • Grossman, G. M. & Krueger, A. B. (1991). Environmental impacts of a North American free trade agreement. NBER Working Paper, 3914. https://doi.org/10.3386/w3914
  • Guha, S. (2018). Pollution haven hypothesis - a meta-analysis. Arthaniti: Journal of Economic Theory and Practice, 14(1-2), 70–96. https://doi.org/10.1177/0976747920150103
  • Haisheng, Y., Jia J., Yongzhang, Z. & Shugong, W. (2005). The impact on environmental Kuznets curve by trade and foreign direct investment in China. Chinese Journal of Population Resources and Environment, 3(2), 14–19. https://doi.org/10.1080/10042857.2005.10677410
  • Hausmann, R. & Fernández-Arias, E. (2000). Foreign direct investment: Good cholesterol? Washington: Inter-American Development Bank.
  • Javorcik, B.S. & Wei, S.J. (2004). Pollution havens and foreign direct investment: Dirty secret or popular myth? Contributions to Economic Analysis & Policy, 3(2), 1–32. Retrieved from http://users.ox.ac.uk/~econ0247/pollution_havens.pdf
  • Jun, W., Zakaria, M., Shahzad, S. J. H. & Mahmood, H. (2018). Effect of FDI on pollution in China: New insights based on wavelet approach. Sustainability, 10(11), 3859. https://doi.org/10.3390/su10113859
  • Kate, A.T. (1993). Industrial Development and the Environment in Mexico. The World Bank Working Paper Series, 1125, Washington: The World Bank.
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There are 73 citations in total.

Details

Primary Language English
Journal Section Articles
Authors

Özge Demiral 0000-0003-0165-2206

Mehmet Demiral 0000-0002-8836-5682

Publication Date October 13, 2021
Submission Date January 19, 2021
Acceptance Date February 16, 2021
Published in Issue Year 2021 Volume: 14 Issue: 4

Cite

APA Demiral, Ö., & Demiral, M. (2021). Testing the validity of the pollution haven hypothesis for regionally leading emerging economies. Ömer Halisdemir Üniversitesi İktisadi Ve İdari Bilimler Fakültesi Dergisi, 14(4), 1307-1327. https://doi.org/10.25287/ohuiibf.864956

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