Essays on Trade, Environment, and Development

Yoshino, Yutaka, Department of Economics, University of Virginia
Mclaren, John, Department of Economics, University of Virginia
Olsen, Ed, Department of Economics, University of Virginia
Ciliberto, Federico, Department of Economics, University of Virginia
Shobe, Bill, Weldon Cooper Center for Public Service, University of Virginia

This dissertation is a collection of four essays addressing various aspects of the inter-linkages among international trade, environment, and development. It seeks to capture several salient issues of the trade-environment-development inter-linkages by considering two types of geographical aspects, i.e., industry agglomeration and geographic orientation in trade. By building economic geography models, the first two essays make theoretical inquiries about how asymmetric environmental policies between two countries affect the allocation of internationally mobile pollution-generating industries. In the first essay, industries chose their locations based on the existing environmental policies. In the second essay, the governments in the two countries adjust their environmental policies endogenously, taking into account industry relocations. With the positive agglomeration externality taken into account, both essays show the theoretical plausibility of countries with more stringent environmental policies hosting a majority of pollution-intensive industries. Firms tend to cluster together when the positive agglomeration effects outweigh the negative congestion effects, including pollution externalities. The pattern of industry agglomeration is more pronounced under sufficiently low trade cost and high degree of transboundary pollution. The third essay is an empirical study of bilateral trade flows in pollution-intensive products, where the geographical orientation in trade is specifically considered. Applying a gravity model to the worldwide bilateral trade data, the study finds some evidence of a pollution haven effect-that is, a decrease in pollution intensity in exports with rising national income. ii It also finds that regional trading bloc participation slightly weakens the pollution haven effect. The fourth essay seeks to address why some countries are too poor to become exporters of manufactured products, including those intensive in pollution. Using firm-level data from seven Sub-Saharan African countries, the essay finds that firms' performance in manufacturing exports is influenced not only by factors that are directly related to trade, such as export promotion incentive programs or customs efficiency, but also by factors related to their efficiency of production, such as domestic infrastructure service quality as well as other firm-specific characteristics. The essay finds that those factors matter more in exports to the global market compared to exports to regional markets.

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PHD (Doctor of Philosophy)
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