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Transition to markets and the environment: Effects of the change in the composition of manufacturing output

Published online by Cambridge University Press:  01 October 1999

TOMISLAV VUKINA ,
JOHN C. BEGHIN  and
EBRU G. SOLAKOGLU
TOMISLAV VUKINA
Affiliation:
Associate Professor, Department of Agricultural and Resource Economics, North Carolina State University, Nelson Hall, Campus Box 8109, Raleigh, NC 27695, USA. Tel. (919) 515-5864; fax (919) 515-6268; E-mail: tom_vukina@ncsu.edu
JOHN C. BEGHIN
Affiliation:
Associate Professor, Department of Agricultural and Resource Economics, NCSU, and Research Associate, WI 53706, USA
EBRU G. SOLAKOGLU
Affiliation:
Graduate Student, Department of Agricultural and Resource Economics, NCSU
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Abstract

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The paper measures the changes in environmental quality that occurred in the early years of economic transition for 12 former centrally planned economies using the information on 13 pollution effluents in the manufacturing sector and the energy intensity of the value added. For the manufacturing sector, the change in the pollution is separated into scale and composition effects. Pollution decreases substantially in most countries because of large decreases in aggregate manufacturing activity. The composition effect is more diverse depending on the effluent type and country. We examine the reduced form relationship between composition effects coupled with the energy intensity rate of change and the extent of policy reforms. The results indicate a strong relationship between environmental improvement and price liberalization, trade and foreign exchange reforms, enterprise restructuring, and privatization reforms. In addition, the amplification of the environmental regulatory regime causes a shift towards a less-polluting allocation of resources.

Type
Research Article
Information
Environment and Development Economics , Volume 4 , Issue 4 , October 1999 , pp. 582 - 598
Copyright
© 1999 Cambridge University Press

Footnotes

The authors are thankful to H. Hettige and D. Shamon for providing the IPPS data base, and to Dean Lueck, Zeke Pasour, Dominique van der Mensbrugghe, Michele Fleury-Brousse, participants of the workshop 'Post-transition and post-privatization in Central–Eastern Europe: Wishful thinking or reality?' held at the Fifth ISSEI Conference in Utrecht, 19–24 August 1996, seminar participants held at the University of Rhode Island in October 1996 and to three anonymous referees on helpful comments on the earlier version of this paper. The usual disclaimer applies.