Air Pollution and ‘Dirty’ Industries: How and Why Does the Composition of Manufacturing Output Change with Economic Development?

This paper examines the impact on air pollution ofchanges in the composition of manufacturing output indeveloped and developing countries. Pollutionemissions from manufacturing output are estimated ina manner which holds constant the effect of technologyand regulations allowing the impact of compositional changes alone on pollution to beestimated. The paper has three main findings; (1) theinverted-U estimated between per capita income and thepollution intensity of GDP arises due to both thecomposition of manufacturing becoming cleaner and theshare of manufacturing output in GDP falling.Compositional changes alone are not responsible forthe inverted-U between per capita income and percapita emissions; (2) changes to the composition ofmanufacturing output are consistent with the pollutionhaven hypothesis, however there is clear evidence thatrising per capita incomes are associated with afalling income elasticity of demand for `dirty'products. This fact may explain the compositionalchanges that occur with development; (3) in additionto the income elasticity effect, the analysis suggeststhat land prices and to a lesser extent the prices oflabour and capital, determine the proportion of dirtyindustry within a country's manufacturing sector.     

Skill Intensity in Foreign Trade and Economic Growth

This paper explores the link between trade structure, trade specialization and per capita income growth. It is argued that industrial upgrading in export specialization patterns has a positive long-run growth effect, while the effect of structural change in industrial import patterns is in principle ambiguous. A standard empirical growth model is augmented by various measures of structural change. The hypothesis that not trade per se matters, but that various types of trading activities impact differently on economic growth is tested on a sample of 45 countries (OECD members and selected Asian and Latin American countries) over the period 1981–1997. The data set comprises exports and imports for 35 manufacturing industries at the 3-digit level of the ISIC classification which are grouped according to skill intensity. The results of the dynamic panel estimation point towards a positive long-run growth effect arising from trade specialization in medium-high-skill-intensive industries. Further, important distinctions between the skill intensity of export and import patterns and their respective influence on economic development, as well as between the group of developing countries and OECD members are observed in this relationship.JEL classification: C23, F43, O19, O41, O57The author is grateful to Michael Landesmann and Robert Stehrer (wiiw), Neil Foster and Jesús Crespo Cuaresma (Department of Economics, University of Vienna), Michael Peneder (Austrian Institute of Economic Research) and two referees for valuable comments. This research is based on Jubiläumsfondsprojekt Nr. 8954, financial support by Oesterreichische Nationalbank is gratefully acknowledged.     

International differences in emissions intensity and emissions content of global trade

Understanding international differences in the emissions intensity of trade and production is essential to understanding the effects of greenhouse gas limitation policies. We develop data on emissions from 41 industrial sectors in 39 countries and estimate the CO₂ emissions intensity of production and trade. We find no evidence that developing countries specialize in emissions-intensive sectors; instead, our evidence suggests that emissions intensities differ systematically across countries because of differences in production techniques. Our results confirm that international differences in emissions intensity are substantial, but suggest that they do not play a significant factor in determining patterns of trade.     

Trade imbalance in international message telephone services

An econometric model is estimated to identify determinants of trade imbalance in international message telephone services markets. Results indicate that asymmetric market structure is important in explaining bilateral market imbalances for high income country pairs. For low and high income country pairs, GDP per capita is the dominant cause of traffic imbalances. The findings suggest that telecommunications liberalization policies are effective in reducing distortions in international traffic flows and settlement payments. However, liberalization should be accompanied by developmental programmes that enhance income per capita and telecommunications network investment in developing countries. Such programmes may be effective in providing a more equitable distribution of the gains from telecommunications reform across countries.     

An empirical investigation of the balance of embodied emission in trade: Industry structure and emission abatement

By constructing the world panel dataset for the pollution emission embedded in international trade of 132 countries for the period between 1988 and 2008, we investigate whether the balance of embodied emission in trade (BEET) is consistent with the implication of pollution haven hypothesis (PHH). By using two differently constructed datasets, we are able to distinguish between the composition (i.e., changes in industry structure of international trade) effect and the technique (i.e., improvement in emission abatement) effect. We find that the composition effect is neither related with the income level nor the democracy level of countries. However, the empirical evidence, with consideration for the technique effect, provides a partial support that income level is negatively related with the BEET. Therefore, the BEET in fact has worsened for developing countries, but not by the composition effect assumed in the PHH.     

Does the Degree of Development Matter in the Impact of Banking Crises on International Trade?

This paper analyzes how a country's degree of economic development affects the impact of banking crises on international trade. To this end, we estimate a gravity model of trade using a sample of 139 countries over the period 1975–2012. Our results show that middle income countries are generally the most negatively affected. In contrast, financial turmoil appears to have less impact on bilateral trade flows among high income countries and, more specially, among low income nations. The level of financial development, contract enforcement, as well as the extent of the use of banking credit within international trade all help to explain our findings.     

贸易开放与发展中国家收入差距扩大——基于中国的理论与实证分析

文章将人力资本结构因素纳入到贸易开放与发展中国家内部收入差距关系的分析框架之中,通过理论推理和实证检验考察了贸易开放、人力资本结构对发展中国家收入差距扩大的影响机制、条件与力度.研究表明,贸易开放对发展中国家收入差距扩大的影响不但与其所带来的技术进步类型有关,还与该国的产业发展战略和人力资本(人才供给)结构密切相关.就我国而言,人力资本结构升级速度慢于贸易产品结构升级速度,是贸易尤其是出口导致收入差距扩大的重要条件.     

Does ecologically unequal exchange occur?

The hypothesis of ecologically unequal exchange posits that low and middle income developing nations maintain an ecological deficit with wealthy developed nations, exporting natural resources and high impact commodities thereby allowing wealthy economies to avoid operating ecologically impactful industries at home. In this survey we assess the footprint of consumption of 187 countries using eight indicators of environmental pressure in order to determine whether or not this phenomenon occurs. We use input–output analysis with a new high resolution global Multi-Region Input–Output table to calculate each trading pair's balance of trade in biophysical terms of: GHG emissions, embodied water, and scarcity-weighted water content, air pollution, threatened species, Human Appropriated Net Primary Productivity, total material flow, and ecological footprint. We test three hypotheses that should be true if ecologically unequal exchange occurs. One: The inter-regional balance of trade in biophysical terms is disproportional to the balance of trade in financial terms. We find this is true, though not strongly so. Two: Exports from developing nations are more ecologically intensive than those from developed nations. We find this is true. Three: High-income nations disproportionately exert ecological impacts in lower income nations. We find this is false: high income nations are mostly exporters, not importers, of biophysical resources.     

International Integration and Growth: A Further Investigation on Developing Countries

The paper examines empirically the linkages between international integration and economic growth in a panel of 47 developing countries and 18 trade blocs over the period 1970–1989. Specifically, it attempts to identify through which channel(s) – notably, specialization according to comparative advantage and increased efficiency, exploitation of increasing returns from larger market, and technology spillovers through investment and trade–trade blocs can affect the economic growth of their member countries. The results suggest that (1) intra-bloc trade does not affect growth significantly; (2) income diversion among member countries contributes positively and significantly to growth; and (3) the size of the trade bloc does matter in the sense that the bigger is not always the better for the welfare of the member countries.     

International treaties on trade and global pollution

The paper shows that global pollution need not rise under free trade in goods and/or emissions even in the complete absence of income effects. Differences in environmental concerns across the countries lead to differences in the pollution intensity of production and, thus, generate the possibility of increasing world output and income without increasing the world pollution by shifting the production of the polluting good from the country with higher pollution intensity of production to the country with lower one. We show that free trade in goods and/or emissions can induce precisely such a shifting of production with the country with greater environmental concern exporting the polluting good. The paper also demonstrates the possibility of a first-best international treaty on global pollution in which each country or group of countries is better-off.     

Global inequality and international trade

The paper analyses the effect of widespread trade liberalisationon global income inequality. The analysis of the trend in globalinequality during 1981–97, presented in the first partof the paper, shows that the apparent growth of income inequalityamong countries conceals a process of convergence. Some developingcountries achieved significantly faster economic growth thanthe advanced industrialised countries and, though small in number,they actually account for a majority of the population of thedeveloping world. Thus international inequality (i.e., the inequalityof distribution of per capita incomes among the world's population)in fact declined even though the inter-country income inequalityincreased. The analysis in the second part of the paper shows(i) that while improved trade performance did have a stimulatingeffect on growth performance of countries, trade liberalisationhad extremely varied effects on trade performance across countries,and (ii) that the distribution of benefits and costs of tradeliberalisation across countries has been such as to reduce internationalinequality without affecting inter-country inequality.     

Globalization and Income Gap from the Perspective of Developing Countries

Using political economic theory, this paper analyzes the impact of economic globalization on international income distribution, including the income gap between developed countries and developing ones, the income gap among the developing countries. The paper states that because the economic globalization is the globalization of capitalism manufacture style and developed countries dominates the process, the income gap between developing countries and developed one is difficult to be narrowed, and the income gap in developing countries will enlarge.     

贸易开放、人力资本与 中国区域收入空间效应* ——基于地级及以上行政区域经验数据分析

本文基于中国326个地级及以上行政区域2010-2012年的数据,利用空间杜宾增长模型（SDM）来测算贸易开放对中国区域人均收入的影响。本文测算了各个区域贸易开放和人力资本对人均收入水平的直接、间接和总影响。结果表明：一个区域的贸易开放程度越高越能促进当地经济的发展,对相邻区域的人均收入也会产生正的影响。同时笔者也发现,人力资本对中国各个区域的经济增长会产生正的直接和间接影响。     

ECONOMIC FREEDOM,SPORT POLICY,AND INDIVIDUAL PARTICIPATION IN PHYSICAL ACTIVITY: AN INTERNATIONAL COMPARISON

Many countries promote participation in physical activity among its citizens. We undertake an international comparative analysis of participation using data from 34 countries in the 2007 International Social Survey Programme Leisure Time and Sports module, augmented with country‐specific characteristics capturing economic freedom and national sport policy. Gross domestic product per capita and economic freedom are associated with higher physical activity participation; past success of the national team in the Olympics is associated with lower participation, but hosting sports mega‐events is associated with higher participation. Our findings indicate that participation in sport and physical activity falls with age and rises with education and income. (JEL H59, I12, I18, J22, L83)     

Economic openness and income growth in developing countries: a regional comparative analysis

This article examines and compares the openness–growth relationship between the high-performing Asian economies (HPAEs) and the rest of the developing world (Sub-Saharan Africa-SSA, South East Asia-SEA and Latin America and Caribbean-LAC). We applied the SYS-GMM estimator to a dynamic standard endogenous growth model which relates economic openness to real per capita income growth. A few key findings emerged from this study. First, economic openness led to increase in real per capita GDP growth in HPAEs and SSA, but not in LAC and SEA. Second, openness to trade accelerated income convergence among countries in SSA, SEA, and HPAEs, however, whereas foreign direct investment inflows accelerated income convergence only in SSA, it rather de-accelerated income convergence in HPAEs. Thirdly, the HPAEs recorded higher positive effect of openness on real per capita GDP growth than any of the other developing regions because they created sufficient stock of human capital that enhanced their absorptive capacity of imported advanced technology. They also created a more stable macroeconomic environment which consolidated the income growth gains from openness. The results of this study highlight the importance of the implementation of policies that are complementary to economic openness in promoting economic growth in the developing world.     

Global distribution and dynamics of economic freedom: Non-parametric approach

The paper exploits the distributional dynamics and structural changes in the endogenous distribution of economic freedom across countries over time by utilizing the Rosenblatt–Parzen Kernel density estimator compared to the original distribution based on the methodology proposed by the Heritage Foundation. We utilize the distribution of economic freedom as a tool to identify which policies enhanced the overall level of economic freedom. We develop the distribution of endogenous economic freedom by decomposing effects of economic freedom on the level of income per capita in IV–2SLS estimation framework for a panel of 134 countries to identify the effect of institutions of economic freedom on the level of per capita income. Structural estimates indicate that improvements in the monetary, fiscal, and labor freedom exert the strongest direct effect on the level of economic freedom and indirect effect on the level of real income per capita. Our study demonstrates considerable differences between the original and endogenous distributional dynamics of economic freedom over time. In exploiting the non-parametric setting of endogenous economic freedom, we identify a recent emergence of twin-peak distribution across countries where developing nations have improved the level of economic freedom considerably compared to the initial year.     

A Sectoral Approach Balancing Global Efficiency and Equity

This paper explores the idea that a properly designed sectoral approach could be the answer to two sets of constraints that hinder international agreements on climate change, namely a genuine concern from developing countries for economic growth and competitiveness issues from industrialized countries. Our sectoral approach builds on three premises: (i) cap-and-trade systems are established in industrialized countries and intensity targets in developing countries, (ii) sectors subject to international trade abide by the rules of the countries in which they trade and (iii) a fraction of the revenues from permits in industrialized countries go towards carbon mitigation in developing countries. We design an economic model that features interactions in three carbon-intensive sectors (two of which are internationally traded) and two countries (an industrialized country and a developing country). Two scenarios are constructed: an Enhanced Sectoral Approach, which refers to our proposal, and a Global Cap, which implements a uniform CO₂ price. We compare the two scenarios in terms of total welfare and equity. It is shown that, for a minor global welfare loss, the Enhanced Sectoral Approach ranks high in terms of equity for emerging countries. This approach also eliminates competitiveness and leakage issues.     

ECONOMIC FREEDOM AND INCOME LEVELS ACROSS U.S. STATES: A SPATIAL PANEL DATA ANALYSIS

There is a large literature estimating the effect of economic freedom on economic growth or income levels. Most studies examine the relationship between economic freedom and growth or income levels for countries, while a few examine the relationship for U.S. states. Absent in the state‐level literature is consideration of the presence of spatial spillovers affecting the freedom‐income relationship. Neglecting to account for spatial autocorrelation can bias estimation results and therefore inferences drawn. We find evidence of a spatial pattern in real per‐capita gross state product (GSP) that affects nonspatial estimates of the freedom‐income relationship. Taking into account the direct and indirect effects of economic freedom on real per‐capita GSP, we find a 10% increase in economic freedom is associated with a 5% increase in real per‐capita GSP. (JEL E02, O47, R11)     

The effect of government expenditure on the environment:An empirical investigation

This paper examines the impact of government spending on the environment using a panel of 77 countries for the time period 1980–2000. We estimate both the direct and indirect effects of government spending on pollution. The indirect effect in particular operates through the impact of government spending on income and the subsequent effect of the income level on pollution. To take into account the dynamic nature and the potential endogeneity in the relationships examined, appropriate econometric methods are used. For SO₂, government spending is estimated to have a negative direct impact on per capita emissions, while the direct effect is insignificant on CO₂ pollution. The indirect effect on SO₂ is negative for low income levels and becomes positive as income increases, while it remains negative for CO₂ for the most part of the sample range. The resultant total effects follow the patterns of the indirect effects, which dominate their respective direct ones for each pollutant. Policy implications from the results vary depending on the income level of the considered countries.     

North–South trade and income inequality

This paper investigates the effects of North–South trade on international income inequality. While empirical studies suggest that trade liberalization encourages income convergence and reduces the per capita income gap between poor and rich countries, North–South trade is shown to increase the income gap between the two regions. On the other hand, trade liberalization by either region increases the welfare of both regions, and does not necessarily reduce the gap in “real income” or utility.