We note that the black market premium enters positively, suggesting that moving away from world markets and restricting convertibility may be correlated with an increase in pollution concentrations, although again this relationship is not significant at conventional levels. There is little to report regarding the relationship between concentrations and tariff levels, but there appears to be a positive relationship between quota coverage and concentrations. The Sachs and Warner measure in column 5 appears to add little as well.
Overall the estimates given in table 2 offer very little evidence of a strong relationship between openness, however measured, and resulting pollution concentrations. It is possible to pick and choose carefully from the table to craft a story where openness to international markets is good for the environment. Neglecting statistical significance, we could note that an increase in openness lowers pollution, while a rise in quota coverage or a movement away from international markets and currency convertibility raises pollution. This reading of table 2 is, however, very selective.
Our reading of table 2 is far less complex: the lack of any significant relationship between concentrations and openness is exactly what we might expect to find. After controlling for other differences across countries, the impact of further openness on pollution should, in theory, only reflect the induced composition effect of trade.
But the sign of this trade-created composition effect should vary with country characteristics. If we fail to condition on country characteristics, then we are at best measuring an average, unconditional, effect of openness. This unconditional response may be positive or negative and will depend on the characteristics of countries in our sample. online payday loans direct lenders only