Technology, International Trade, and Pollution from U.S. Manufacturing

Abstract

Total pollution emitted by U.S. manufacturers declined over the past 30 years, while manufacturing output increased. This improvement must result from one of two trends: (1) change in production or abatement processes ("technology"); or (2) change in the mix of goods manufactured in the U.S, which itself may result from increased net imports of pollution-intensive goods ("international trade"). This paper first shows that most of the decline in pollution from U.S.manufacturing has been due to changing technology, rather than changes in the mix of goods produced, although the pace of that technological change has slowed over time. Second, the paper provides evidence that increases in net imports of pollution-intensive goods are too small to explain more than about half of the pollution reductions from the changing mix of goods produced in the U.S. Together, these two findings demonstrate that shifting polluting industries overseas has played at most a minor role in the cleanup of the U.S. manufacturing sector.International Trade, Pollution Haven, Industrial Flight