The effect of trade on the environment in Turkey and the pollution haven hypothesis: Environment management system (ISO 14001) and econometric evidence

The relationship between trade and environment during the process of trade liberalization has become one of the most prominent issues along with the fact that environmental problems have been brought to agenda recently. Due to causes such as trade liberalization and loose environmental regulations, polluted industries have moved from developed to developing countries and have caused increasing pollution emissions in developing countries. This phenomenon is known as ?the pollution haven hypothesis? and stimulated intensive research on the field.The purpose of this study is to examine the effects of trade on the environment within the scope of ?the pollution haven hypothesis?. The rationale for working on this issue is that there are not many studies in the literature testing the ?the pollution haven hypothesis? for Turkey. Besides, most studies in the field suffer from data set constraints, that is time series data in specific. This work includes two empirical applications to test the hypothesis. In the first one, time series econometrics is used to determine the scale, technical and composition effects. The second application employees the Environment Management System (ISO 14001) to test the hypothesis in a descriptive fashion focusing on the firms at the chosen five polluted industries if they have the Environment Management System (ISO 14001) certificate or not.The findings of the first empirical application which uses time series econometrics suggest that trade liberalization, increase in trade activities and income, decrease pollution emissions. The second application in this work shows that the majority of the firms at the chosen five polluted industries have Environment Management System (ISO 14001) certificate. The findings indicate that trade liberalization does not damage environment. On the contrary, it provides benefit and the ?the pollution haven hypothesis? is not valid for Turkey.