Pollution haven hypothesis and the role of dirty industries in Turkey's exports

Abstract

The pollution haven hypothesis maintains that the industries that are highly pollution intensive, i.e. dirty industries, have been migrating from developed economies to the developing world. It is argued that the environmental concerns of the developed economies caused them to enact strict environmental regulations, which have increased the cost of production of the dirty industries at home. On the other hand, the developing countries with their low wages and lax environmental regulations have been attractive alternative producers in these sectors. Thus, developing countries provide pollution havens for dirty industries. In this study, the pollution haven argument for Turkey, for the 1994–1997 period, is examined. The study focuses on the pollution haven hypothesis from the trade perspective by looking at the manufacturing industry data at four-digit ISIC detail by using the panel data approach. It is found that exports increase as the dirtiness of the industries increases, providing some evidence for the pollution haven hypothesis.