The Toxic Intensity of Industrial Production: Global Patterns, Trends, and Trade Policy

A newly developed data set is exploited to investigate recent changes in the international distribution of industrial pollution. In particular, 3 issues are examined: 1. the relationship between the toxic intensity of industrial production and the level of economic development, 2. the impact of OECD environmental regulation on global changes in toxic intensity, and 3. the relationship between trade policy and the toxic intensity of industrial production in LDCs. Overall, the analysis indicates an upward long-term trend in industrial emissions, both relative to GDP and relative to manufacturing output, for the majority of countries. Moreover, these positive, long-term trends are clearly higher among the lower-income countries. The findings on trade policy and toxic intensity change suggest a revised view of the displacement phenomenon. Rapidly increasing toxic intensity does not seem to have characterized all LDC manufacturing in the wake of stricter OECD environmental regulation. Paradoxically, intensity has grown much more rapidly in economies that are relatively closed to international trade.