Pollution Haven Hypothesis and the Bilateral Trade Between India and China

Abstract

The pollution haven hypothesis is studied from a bilateral trade perspective in this study, taking the reference of two Asian giants, namely, India and China. For this purpose, trade in pollution-intensive industries is analysed using data collected from the United Nations Comtrade dataset based on Standard Industrial Trade Classification codes for 1992–2019. The analysis helps us argue that between the two, China's demand is more pollution-intensive and India is the major supplier of pollution-intensive products. From an environmental perspective, this implies that China seems to be gaining from trade, and India is becoming a pollution haven in its trade with China.