Pollution haven hypothesis: Pollution Haven Hypothesis: Empirical Evidence
Surprisingly, there is relatively little work that directly tests the pollution haven hypothesis. Several studies have found that the share of pollutionintensive goods in exports from developing countries has risen over time and the share of pollutionintensive goods in exports from members of the Organisation for Economic Co-operation and Development (OECD) has fallen over time. These trends are also consistent, however, with economic growth and capital accumulation in developing countries and are not a full test of the pollution haven hypothesis.
Ederington, Levinson, andMinier (2004) looked at the pollution content of U.S. exports and imports during the period 1972 94 and found that U.S. imports from non OECD countries have become less pollution intensive over time relative to U.S. exports. This finding is opposite to what the pollution haven hypothesis predicts. Antweiler et al. (2001) estimate the effects of increased openness to trade on sulfur dioxide pollution, controlling for scale and other factors. They found that, all else equal, increased openness tended to increase SO2 pollution in rich countries and reduce it in poor countries.Againthis is opposite towhat the pollution havenhypothesis predicts.BothEderingtonet al. and Antweiler et al. argue that the evidence suggests that other factors (such as capital abundance or agglomeration) are more important than environmental policy in explaining trade flows.
In summary, there is a growing body of evidence thatmore stringent environmental policy does reduce a country’s competitiveness in pollutionintensive industry, but there is little or no evidence to support the strong version of the pollution haven hypothesis: other factors are more important (on average) for affecting trade patterns. These are, however, the results of studies that look at broad patterns. There will be cases where poor countries have a comparative advantage in polluting industry for reasons unconnected with environmental policy (such as in polluting industries intensive in the use of unskilled labor). In cases such as this, weak pollution policy will reinforce the preexisting comparative advantage and increase the tendency for such industry to locate in a poor country.