How Does Spatial Division of Labour Relate to Industrial Pollution?

Abstract

International trade reallocates resources among places, which thereby reshapes the spatial division of labour at multiple scales. Accordingly, there are rising concerns about whether trade-induced specialisation in polluting/non-polluting industries leads to the polarisation of environmental performance among regions. This chapter answers this question by looking into the regional division of labour. To better understand the trade-induced spatial division of labour, this chapter considers the spatial division of labour as a dynamic process of path extension rather than the static levels of specialisation. Path extension suggests the sustained growth of incumbent activities. Foreign trade is one of the driving forces for path extension. In such a setting, the occurrence of regional polarisation is built on the premise that once created, the path for regional development will extend endlessly and does not change. From the evolutionary perspective, this is impossible. Both internal and external forces are restricting the path extension. Internal forces stem from the sources of scale diseconomies, such as congestion effects. External forces indicate the effects of exogenous factors, including institutions and nonlocal linkages. Empirical findings support the role of external and internal forces in restricting the path extension of polluting industries, which explain why regions specialised in polluting industries are not locked.