Fifteen years ago, Werner Antweiler introduced the concept of the Pollution Terms of Trade (PTT), as the ratio between the average pollution content of exports and the average pollution content of imports. Intuitively, this index is inversely linked with the indirect environmental benefits that a country may derive from trade in goods of different pollution content, by specializing in clean goods and importing dirty goods from the rest of the world. This issue is clearly related with the “pollution-haven” argument according to which countries with lax environmental standards, notably poor countries, may attract dirty industries, and thus tend to exhibit a higher level of PTT than their richer partners.
