Exporting and Environmental Performance: Where You Export Matters

Produced by: 
Inter-American Development Bank
Available from: 
January 2022
Paper author(s): 
Juan S. Blyde
Mayra A. Ramírez
Topic: 
Environmental Economics
Year: 
2022

Empirical  analyses that  rely  on micro - level panel  data  have  found that  exporters  generally pollute  less than non exporters .  While  alternative  explanations  have  been  proposed,  firm - level  data  has  not  been  used  to examine the role of destination markets in th e relationship between exports and pollution. In this paper , we argue  that  because  consumers  in  high - income countries value clean environments more than consumers  in developing   countries,   exporters   targeting   high - income   countries   are   more   likely   to   improve their environmental outcomes than exporters targeting destinations where the environment is not valued highly . Using a panel of firm - level data from Chile we find support for this hypothesis. A 10 - percentage - point increase in  the  share  of  exports  to  high - income  countries  is  associated  with a reduction in CO 2 pollution intensity  of about  16%. The  results  have  important  implications  for  firms  in  developing  countries  aiming  to  target  high - income markets. 

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