Paper #1331

Títol:

Sources of comparative advantage in polluting industries

Autors:

Fernando Broner, Paula Bustos i Vasco Carvalho

Data:

Juny 2011

Resum:

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 identied 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.

Paraules clau:

International Trade, Environmental Regulation, Comparative Advantage, Air Pollution.

Codis JEL:

F11, F18, Q53, Q56

Àrea de Recerca:

Macroeconomia i Economia Internacional

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