In Search of Pollution Havens? Dirty Industry in the World Economy, 1960 to 1995

Abstract

The past three decades have witnessed rapid economic development, particularly in countries that have pursued relatively open economic policies. Rising environmental awareness in the 1960s also led to a rapid tightening of pollution regulation in the industrial economies. According to the "pollution havens" hypothesis, the result should have been more rapid growth of dirty industries in unregulated economies that were open to international trade. Using data for the period 1960 to 1995, the authors find that the displacement of pollution to developing countries has not been a major phenomenon for several reasons. Tendencies toward formation of pollution havens have been self-limiting because economic growth has generated countervailing effects through increases in regulation, technical expertise, and investment in cleaner production. In practice, the authors argue that pollution havens have apparently been as transient as low-wage havens.

The Environmental Kuznets Curve and the Structural Change Hypothesis

“…Nickell et al (2008) show that in the 1975-1995 period the reduction in the manufacturing share of GDP in Japan, UK and US has been substantial (about 5 percentage points), and such a reduction has been accompanied by an increase in the share of services. A possible explanation of such a decline in the manufacturing share is related to the pollution haven hypothesis stating that when economies become sufficiently rich they may spin-off pollution-intensive products to developing countries with lower environmental standards, either by buying dirty goods from abroad or by directly producing these goods in these countries (Mani and Wheeler 1998). Several factors may induce the search and development of pollution havens, and in particular international trade policies, environmental regulation and carbon taxes 12 are thought to play an important role in this process.…”

Mapping international flows of electronic waste

“…For example, Birdsall and Wheeler (1993), drawing on case studies and econometric evidence, claim that increased foreign investment in Latin America has not led to an increase in pollution-intensive industrialization (see also Walter 1978). Similarly, Wheeler (2001) comparing data for trends in air quality in the United States versus China, Brazil and Mexico (then the largest recipients of foreign investment in the developing world) found that air quality had actually improved from the 1980s through the mid-1990s in all four countries (see also Mani and Wheeler 1998). On the other hand, in a study of the EU, Cave and Blompist (2008) find that the pollution haven hypothesis holds for energy-intensive trade, but not for toxicintensive trade while Zhang and Fu (2008) find that Chinese provinces with stricter environmental enforcement receive lower inflows of foreign direct investment.…”

China’s Pollution-Intensive Industry Transfer Path and Driving Factors—An Empirical Study Based on Spatial Panel Model

“…Long and Siebert (1991) argue that in the perfectly competitive market, the government levies a sewage tax to reduce the rate of return on capital, which in turn drives capital flows abroad and transfers pollution-intensive in-dustries. Mani and Wheeler [5] also argue that harsh environmental standards in rich countries have forced pollution industries to shift to developing countries that are more liberal in environmental regulation.…”