CentER

Christian Bogmans

Date of PhD defense:	1 June 2011
Title of thesis:	Essays on International Trade and the Environment
ISBN:	978 90 5668 288 0
Promotor:	Prof.dr. Cees Withagen

Abstract:
The first and main objective of this thesis is to study the relationship between international trade and the environment by means of theoretical models, with a special emphasis on the influence of (i) economic growth and (ii) international trade in intermediate goods. The second objective is to determine empirically the impact of corruption on international trade. Some key questions that we have asked include: Can cross-country differences in environmental policy lead to poor countries becoming pollution havens? Is there a relationship between the level of income per capita and the level of local environmental quality? And in what way do international trade and economic growth bear on this relationship? Is it possible for countries that are open to international trade to export the costs of environmental policy onto their trading partners using higher export prices? And what are the implications of this motive for global environmental quality? Does corruption always discourage international trade?

One of the main findings of the thesis is that a 'race to the top' in environmental policy is possible when countries do not cooperate. This occurs because under international trade domestic policy makers do not internalize the effects on foreign welfare of higher export prices induced by stricter environmental policies. We find that this incentive is stronger when certain aspects of globalization, including the degree of vertical integration and international factor ownership, are strengthened. In contrast with previous research findings, we find that with trade in intermediate goods carbon leakage might actually be negative. Chapter 6 studies the cross-country distribution of contributions to a global public good in a dynamic growth model. With differences in initial conditions, a pattern of overlapping Kuznets curves emerges where pollution is already decreasing in some countries while still increasing in others. Finally, the empirical study in chapter 4 reveals the importance of using variables directly related to corruption and institutions at the border to investigate the effects of corruption and institutions on international trade. Whereas corruption in general hampers international trade, bribe paying to customs actually enhances imports.

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