Arthaniti: Journal of Economic Theory and Practice, Jun 1, 2015
In this paper the Pollution Haven Hypothesis (PHH) has been taken for quantitative literature rev... more In this paper the Pollution Haven Hypothesis (PHH) has been taken for quantitative literature review. An attempt has been made to isolate the systematic factors from the specific factors present in different published empirical works which are conducted to verify the presence of PHH in different contexts, with varied degree of success. According to the PHH, with trade liberalization the rich countries will specialize in cleaner industries since they are expected to have stricter environmental regulations while the poor or low income countries with a laxer environmental regulation will specialize in pollution intensive industries. The channel of pollution movement and the role of domestic policies as well as local characteristics are found to be quite distinct for different studies and no conclusive evidence in this context has been accepted in the literature. After conducting the meta-analysis, it is observed that the systematic factors contributing favorably to the PHH are related to the level of industry-disaggregation at which the study is being conducted, the nature of trade relation being considered (i.e. bilateral or multilateral), the level of economic development and the stringency of environmental regulation. Control for the possible presence of endogeneity among the explanatory factors appears to improve the reliability of the estimates to significant extent. However, no significant contribution of factor endowment hypothesis, the type of data and specification of pollution measures is observed.
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