Sources of Comparative Advantage in Polluting Industries

Fernando A. Broner · Paula Bustos · Vasco M. Carvalho

177 citations0/0 files storedNational Bureau of Economic Research

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Global trade and economics Climate Change Policy and Economics Energy, Environment, Economic Growth

Abstract

We study the determinants of comparative advantage in polluting industries.We combine data on environmental policy at the country level with data on pollution intensity at the industry level to show that countries with laxer environmental regulation have a comparative advantage in polluting industries.Further, we address the potential problem of reverse causality.We propose an instrument for environmental regulation based on meteorological determinants of pollution dispersion identi…ed by the atmospheric pollution literature.We find that the effect of environmental regulation on the pattern of trade is causal and comparable in magnitude to the effect of physical and human capital.

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References

1994Economic Growth and the Environment 1999Why do Some Countries Produce So Much More Output Per Worker than Others?1991Environmental Impacts of a North American Free Trade Agreement 2002Technology, Geography, and Trade 2012A new data set of educational attainment in the world, 1950–2010 2008Bootstrap-Based Improvements for Inference with Clustered Errors 1998Is Free Trade Good for the Environment?1999Networks versus markets in international trade

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