Environmental regulation as a determinant of trade: an empirical investigation of the "Pollution Haven Hypothesis" in the context of international trade

Abstract

This paper applies an augmented version of the Heckscher-Ohlin-Vanek model to a broad cross section of countries for the period 2001 to 2011, providing evidence that a country's environmental regulatory regime has an influence on the energy content of trade. These results conform to predictions made under the "Pollution Haven Hypothesis" and the notion of "Carbon Leakage", reiterating the importance of incorporating these issues to some extent in the formulation of future trade and climate policy