Kiel Working Papers, Kiel Institute for World Economics
No 1491:
The Impact of Trade and Economic Growth on the Environment: Revisiting the Cross-Country Evidence
Awudu Abdulai and Linda Ramcke
Abstract: This paper explores the interrelations between economic
growth, international trade and environmental degradation both
theoretically and empirically. Panel data from developed and developing
countries for the period of 1980 to 2003 is used and previous critique,
especially on the econometric specification, is embedded. In particular, it
is not assumed that there is a single link for all countries. Several
environmental factors and one sustainability indicator are analyzed for the
full sample, regions and income groups. The results indicate that there is
an Environmental Kuznets Curve (EKC) for most pollutants, but with several
reservations. None of the various hypotheses that concern the link between
trade and environmental degradation can be entirely confirmed. If anything,
there is modest support for the Pollution Haven Hypothesis (PHH). In
addition, there are signs that trade liberalization might be beneficial to
sustainable development for rich countries, but harmful to poor ones.
However, a sustainable development path is particularly important for
developing countries, as the poor are most exposed and vulnerable to the
health and productivity losses associated with a degraded environment.
Given that developing countries do not usually have the institutional
capacities to set up the appropriate environmental policies, it is on
developed countries to take the lead in addressing environmental
degradation issues and assisting developing countries
Keywords: sustainable development, Pollution Haven Hypothesis, Environmental Kuznets curve, Adjusted Net Saving; (follow links to similar papers)
JEL-Codes: F18,; Q56; (follow links to similar papers)
28 pages, March 2009
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