Application of Pollution Haven Hypothesis in identifying dirty industries Evidence of iran-china commercial relationship

Subject Areas : environmental management

Reza  Akhbari ¹ (MSc of Environmental economics, University of Allameh Tabataba’I, Tehran, Iran. *(Corresponding Author))
Hamid  Amadeh ² (Assistant professor, Department of agricultural and environmental Economics, Faculty of economics, University of Allameh Tabataba’I, Tehran, Iran.)

Received: 2015-06-06 Accepted : 2015-12-15 Published : 2017-06-22

Keywords: Pollution Haven hypothesis, trade, EKC, bounds testing, ARDL,

Abstract :

Background and Objective: In all societies, economic growth and development appear kind of main goal but they also have negative side effects on other fields such as environment. In recent year, lots of discussion about negative side effects of globalization and free trade without restrictions has been done and with proposing the Pollution Haven Hypothesis (PHH), the massive share of trade and the importance of globalization in transferring pollutants have been revealed. Method: In this study we used ARDL (Auto Regressive Distributed Lag) approach to cointegration and bounds test to identify long run relationships between variables in the PHH models about Iran-China trade relationship. All data that we used are in time series format and including 1987-2004. We separate dirty industry from green ones by ISIC codes. Four codes about dirty industries were identified and based on them we present five models that included four models for each ISIC codes that were introduced and one models to examine this subject that if all for goods were aggregated, can the PHH still true? Findings: Results show that Environmental Kuznets Curve (EKC) is N shaped, the share of manufacturing products in CO2 emission is enormous, PHH from Iran to China is accepted about 34 and 35 ISIC codes, dirty industries that we export their products are pollution intensive about 35 and 36 ISIC codes. Discussion and Conclusion: The evidence highlights the need to look at the imported goods related to dirty industries in details because now it is clear that PHH may be existed if the examination was perform in the detailed level with looking at dirty industries. This approach to investigating of PHH can help policy makers to identify the green and dirty industries exactly and improve the environmental condition that we live in.

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