Environment Pollution Control: Advantage or Disadvantage for Latecomer’s Economies in East Asia?

Hiroyuki Taguchi, Takashi Yoshida
JEL codes: 
PRI Discussion Paper Series

Using the analytical framework of the environmental Kuznets curve, this study examines whether the latecomers economies in East Asia enjoy technological spillover effects (latecomers advantage) or suffer pollution haven damages (latecomers disadvantage) in their environmental pollution management. We carried out dynamic panel estimation by Generalized Method of Moments (GMM) using the panel data with 18 economies for the period from 1990 to 2007. We found two contrasting results among the environmental indices. First, per capita consumption of ozone-depleting substances (ODS) and industrial organic water pollutant emissions (BOD) indicate monotonic decreasing trends with per capita real GDP while per capita carbon dioxide emissions (CDE) show monotonic increasing trend. Second, the ODS and BOD represent the dominance of the latecomers advantage while the CDE reveals that of the latecomers disadvantage. We speculate that the contrast in the trends comes from the difference in the origin of emissions: the ODS and BOD come mainly from production (easily regulated on the local level), and the CDE come from both production and consumption (easily externalized and not easily subject to regulation). We also presume that the contrast in the latecomers effects lies in the degree of maturity in regulatory framework and technology that offset pollution haven effect: good governance for controlling the ODS and BOD, versus unrestricted carbon leakage for latecomers economies.