Abstract
This study attempts to relook at the pollution haven hypothesis for the G7 and BRICS countries. The empirical analysis begins by detecting the cross-sectional dependence among the country panels for the period 2005-2015 and applies the second-generation unit-root and Westerlund-Edgerton LM bootstrap cointegration tests to precisely determine the long-run equilibrium relationship between emissions embodied in net export and the real GDP, FDI, trade openness, energy consumption and financial development. The result shows a 1% increase in the real GDP and the FDI increasing the emission variable for the BRICS countries by 0.210% and 0.215% respectively, however, for the G7 countries, reducing the emission variable by 0.169% and 0.038% respectively. These findings corroborate the principles of the pollution haven hypothesis, labelling the BRICS countries as pollution haven and adding new argument to restructure the mitigation obligations for the giant emitters.
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