Are Developed Countries Outsourcing Pollution?

Abstract

Have rich countries improved their environments by importing polluting goods? No, the mix of goods imported has shifted towards those from cleaner industries, not dirtier. Has pollution worsened in poor countries manufacturing goods for export to rich ones? That depends. Emissions intensities for similar industries are higher in poor countries, which means that even balanced trade causes more pollution there, even for the same goods. And proportional growth in trade has increased that gap. Whether we should consider that to be “outsourcing pollution” is debatable. Have environmental regulations enacted by rich countries caused either of the first two changes? No, the evidence does not show that regulations cause outsourcing.