Judith Dean

As the search for resilience alters global value chains (GVCs), many developing countries hope to benefit from GVC participation. China's heavy reliance on GVC trade and its high pollution levels suggest that such benefits may come at the cost of the environment. Yet direct evidence on environmental effects from GVCs is limited. This paper proposes that GVCs and foreign investment can reduce pollution intensity through three channels: greener technologies, a wider range of local tasks, and learning. Drawing on the Copeland-Taylor trade and pollution model and the Feenstra-Hanson outsourcing model, we demonstrate this possibility. We then test this hypothesis using Chinese industrial SO 2 and chemical oxygen demand emissions data. We develop two measures of the range of GVC tasks: a variant of the export extensive margin, and an adaptation of firm import and export upstreamness. Results suggest that GVC participation reduced industrial emissions intensity in China through all three channels.

As multilateral negotiations focus more on reductions and removal of non-tariff barriers (NTBs), the importance of quantifying the impact of these barriers has increased. Recent studies have derived ad valorem equivalents for NTBs for a large number of countries and/or products, but the derivation has been indirect, due to either lack of price data or NTB incidence measures. This paper uses city level retail price data to directly estimate the average impact of core NTBs on prices of 47 consumer products, grouped into four separate sectors, for more than 60 countries in 2001. The analysis uses both government self-reported data and a new database of private sector complaint data to assess NTB incidence. A differentiated products model is used to capture imperfect substitutability between products. With city level price data—including both inter- and intra-country price differences—a more precise distinction can be made between the impact of NTBs and the impact of local distribution costs in raising price. The model is estimated using an instrumental variables approach to incorporate the endogeneity of NTBs. Results suggest that core NTBs are still highly restrictive in many countries and for many traded goods. While NTBs appear to be complements to tariffs, in some sectors the presence of a tariff reduces the price impact of the NTB. Results also suggest that in some sectors, the restrictiveness of NTBs is highly correlated with country income.

We use the US International Trade Commission's uniquely detailed 1995–2007 Chinese Customs data to better understand the pattern of trade between China and its two largest trading partners, Japan and the United States. Our review finds that only a small share of these flows can be characterized as arm's length, one-way trade in final goods. Instead, we find extensive two-way trade, deep vertical specialization, concentration of trade in computer and communication devices, and a prominent role for foreign-invested enterprises. While these characteristics define both bilateral relationships, important differences between the two pairs do emerge, suggesting that trade costs influence the method by which multinationals choose to integrate their production with China. Consequently, we argue that dialogue on East Asian trade liberalization should include the possibility of significant production gains for the US from its inclusion in any regional agreements.

At the center of the pollution haven debate is the claim that foreign investors from industrial countries are attracted to weak environment regulations in developing countries. Some recent location choice studies have found evidence of this attraction, but only for inward FDI in industrial countries. The few studies of inward FDI in developing countries have been hampered by weak measures of environmental stringency and by insufficient data to estimate variation in firm response by pollution intensity. This paper tests for pollution haven behavior by estimating the determinants of location choice for equity joint ventures (EJVs) in China. Beginning with a theoretical framework of firm production and abatement decisions, we derive and estimate a location choice model using data on a sample of EJV projects, Chinese effective levies on water pollution, and Chinese industrial pollution intensity. Results show EJVs in highly-polluting industries funded through Hong Kong, Macao, and Taiwan are attracted by weak environmental standards. In contrast, EJVs funded from non-ethnically Chinese sources are not significantly attracted by weak standards, regardless of the pollution intensity of the industry. These findings are consistent with pollution haven behavior, but not by investors from high income countries and only in industries that are highly polluting. Further investigation into differences in technology between industrial and developing country investors might shed new light on this debate.

Concern about global poverty has recently been increasing in public and private circles and in the church. However, we must recognize that poverty is complex and multidimensional, and solutions will be also. Our solutions need to embody good stewardship by understanding the needs, interests, and incentives of poor communities. Thenacademics and practitioners can partner together, combining their knowledge and experience to research, design, and evaluate effective poverty reduction programs. Supporting efforts that embrace research and evaluation as tools for good stewardship will help generosity translate into real help for poor people.

Some believe that relatively lenient environmental standards give developing countries a comparative advantage in pollution–intensive goods. Thus, freer trade will harm their environment. This paper brings together the literature on openness and growth, and on the environmental Kuznet’s curve, to demonstrate that the opposite may be true. A simultaneous–equations system is derived which incorporates multiple effects of trade liberalization on the environment. Estimation using pooled provincial data on Chinese water pollution, suggests that freer trade aggravates environmental damage via the terms of trade, but mitigates it via income growth. Simulations suggest that the net effect in China was beneficial. JEL Classification: Fl3, Q28, 0l9 Est–ce que la libéralisation du commerce est nuisible pour l’environnement? Un nouveau test. Certains croient que des normes environnementales relativement peu contraignantes donnent un avantage comparatif aux pays en voie de développement dans la production de biens qui polluent intensivement. Donc, un commerce plus libre contribuera à nuire à l’environnement. Ce mémoire synthétise la littérature spécialisée sur l’ouverture des marchés et la croissance, ainsi que sur la courbe de Kuznets, pour montrer que l’inverse est vrai. On dérive un système d’équations simultanées qui incorpore les multiples effets de la libéralisation du commerce sur l’environnement. La calibration de ce système, en utilisant de manière intégrée les données provinciales de pollution de l’eau en Chine, suggère qu’un commerce plus libre aggrave l’état de l’environnement par le truchement du jeu des termes d’échange, mais que cet effet est mitigé par l’effet de croissance des revenus. Des simulations suggèrent que l’effet net en Chine est positif.