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Alexander Rohlf, Mannheim U. Print
Friday, 20 October 2017, 12:15 - 13:15

Alexander Rohlf, Mannheim U.

Did Globalization help Germany become cleaner? -The effect of increasing Import/Export Exposure on local air pollution at the German county level 

Abstract: In this paper, we study whether an increase in import and export exposure towards China and Eastern European countries helped Germany in reducing pollution concentrations in the air. The time frame under study are the years 1998-2008 that coincide with China's admission to the WTO in 2001 and the increase in trade between Germany and the Eastern European countries that recently joined the EU. We observe pollution concentration changes for substances such as NO2, SO2 and PM10 through raster data and pair this information with variables capturing how exposed German counties were to import and export streams regarding China and Eastern Europe. These measures are constructed based on employment shares in industrial sectors and the changes in import and export exposure for the respective sectors. Our analysis is based on a differences-in-differences framework on the German county level with the aggregated monetary effects of trade exposure as treatment variables and continuous measures of the changes in pollution concentrations as dependent variables. The model controls for endogeneity by using world-wide trends in globalization as instrumental variables and is able to isolate effects for individual trade partners. We find a positive effect of rising import exposure on environmental quality for both NO2 and PM10 but inconclusive results for SO2. On the other hand, we find smaller or insignificant effects of the rise in export exposure due to the accompanying increase in production. The results for PM10 survive a number of robustness checks and the inclusion of a basic set of control variables. This leads to the conclusion that on an aggregate level the rising trade ties with China allowed Germany to focus on cleaner industries and to reduce pollution concentrations. While this holds true to a minor degree for Eastern Europe, the sheer growth in export production volume leads to more ambiguous effects resulting from the trade ties with this geographical region. 

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