Will developing countries become pollution havens for developed countries? An empirical investigation in the Belt and Road

Abstract The pollution haven hypothesis (PHH) posits that differentiated environmental regulations will result in inter-country relocation of dirty industries. This article proposes a pollution haven hypothesis validated model to conduct a comprehensive analysis on the PHH in a case study of the Belt and Road, composed of calculating carbon emission embodied in imports and exports, testing the PHH and exploring the formation mechanism of pollution havens. The findings obtained show that China has become a pollution haven for 22 developed countries, and 19 developing countries have become China's pollution havens. There is weak evidence in favor of the PHH in trades between China and the other 22 countries. Moreover, the validity of the PHH is jointly associated with international production fragmentation as well as factor endowment.