Globalization and Environment: Can Pollution Haven Hypothesis alone explain the impact of Globalization on Environment?

The economic literature on trade and environment seeks empirically test hypotheses about how trade affects the environment. It is important to resolve current policy debates. Applying panel data technique we examine the impacts of globalization on pollution level, pollution intensity and relative change of pollution for the developed (OECD), developing (Non-OECD) country groups, and the world as a whole. This paper examines the factor endowment and pollution haven hypotheses that predict how trade affects the environment. Interaction effects also play a crucial role to determine the impact of globalization on environment. In this study we use CO2 emission data and observe that the impact of globalization on environment heavily depends on the basic characteristics of a country and its dominating comparative advantage. The empirical results suggest that globalization increases CO2 emission, which is the main culprit of the global warming.