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Importing, outsourcing and pollution offshoring

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  • Cole, Matthew A.
  • Elliott, Robert J.R.
  • Okubo, Toshihiro
  • Zhang, Liyun

Abstract

Focusing on Japan over the period 1988–2013, this paper provides the first test of the extent to which pollution offshoring has occurred for this major industrial economy. In so doing, we identify whether the composition of domestic production, imports, overall trade patterns and overseas outsourcing has become more or less pollution intensive. We then focus on the role played by overseas outsourcing in pollution offshoring. Utilising a unique dataset of approximately 4000 Japanese firms for the period 2009–13, we use propensity score matching and difference-in-differences to examine how a firm's CO2 emissions intensity is affected by its decision to outsource some of its production overseas. Our results indicate that the composition of Japanese imports appear to have become dirtier and the carbon embodied within Japanese imports is larger and has grown more rapidly than the carbon embodied within exports. We also find that relative to a control group, the growth rate of pollution intensity of firms that begin overseas outsourcing is 7.3 percentage points lower in the year that they start overseas outsourcing and 7.7 percentage points lower in the following year, suggesting that outsourcing is one route through which pollution offshoring is occurring. New importers also experience slower emissions growth but the reduction is less than for new outsourcers.

Suggested Citation

  • Cole, Matthew A. & Elliott, Robert J.R. & Okubo, Toshihiro & Zhang, Liyun, 2021. "Importing, outsourcing and pollution offshoring," Energy Economics, Elsevier, vol. 103(C).
    • Handle: RePEc:eee:eneeco:v:103:y:2021:i:c:s0140988321004345
    DOI: 10.1016/j.eneco.2021.105562
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    More about this item

    Keywords

    Pollution offshoring; Outsourcing; Propensity score matching; Difference-in-differences;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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