Passing the Hot Potato : On trickle-down regulation and the influence of trade on domestic CO2 emissions

Abstract: The environmental Kuznets’ curve suggests that after per capita income has passed acertain threshold, pollution will begin to decrease as further economic progress is made. Thisthesis deals with the impact of trade on said decrease. A recursive regression of per capita CO2emissions on GDP per capita and the ratio of manufactured imports to GDP disentangles theevolution of trade as a pollution mitigating factor. Looking at Denmark, Finland, Norway, andSweden because of their homogeneity and the fact that they begin to present a similar decreasein their economic pollution-intensities, this thesis discovers an increasingly negative impact ofimports on the incidence of domestic carbon emission. Based on this de facto export of emissions,this thesis concludes with the potential design of, and the abating effects from an increasein pollution internalization.