Does International Economic Integration Lead to a Cleaner Production in China?

Production and Operations Management, 2011

36 Pages Posted: 28 Sep 2013

See all articles by Lin Liguo

Lin Liguo

Shanghai University of Finance and Economics

Jon Jungbien Moon

Korea University Business School

haitao Yin

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management

Date Written: December 19, 2011

Abstract

In contrast to the Pollution Haven Hypothesis, the Trade-Up Hypothesis holds that international integration helps improve firms’ environmental performance in developing countries. Using firm-level data from Shanghai, this paper examines how international linkages, in the form of foreign direct investment or international trade, affect firms’ environmental compliance and performance. We find that firms with international linkage via ownership exhibit better compliance with environmental regulation and emit less pollution than firms with no international linkage. We also find that firms with international linkage via market exposure are more likely to exhibit better compliance with environmental regulation than firms with no international linkage, but find no evidence that the former emit less pollution than the latter. This provides a piece of empirical evidence for the Trade-Up Hypothesis.

Keywords: Trade-Up Hypothesis, Pollution Haven Hypothesis, International Integration, Environment, China

Suggested Citation

Liguo, Lin and Moon, Jon Jungbien and Yin, Haitao, Does International Economic Integration Lead to a Cleaner Production in China? (December 19, 2011). Production and Operations Management, 2011, Available at SSRN: https://ssrn.com/abstract=2316149

Lin Liguo

Shanghai University of Finance and Economics ( email )

777 Guoding Road
Shanghai, AK Shanghai 200433
China

Jon Jungbien Moon

Korea University Business School ( email )

145 Anam-ro, Seongbuk-gu
Seoul, 136-701
Korea, Republic of (South Korea)
+822 3290 2837 (Phone)

Haitao Yin (Contact Author)

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management ( email )

No.535 Fahuazhen Road
Shanghai Jiao Tong University
Shanghai, Shanghai 200052
China

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