ABSTRACT
Intuitively, such an outcome is plausible, but in fact are pollution abatement costs significant enough to cause major relocations of activity? In the case of the United States, expressing these abatement costs as a share of value-added in manufacturing industries gives an average figure of 1.38 percent. For Mexican-US trade and the operation of maquiladora assembly plants in the border zone, Grossman and Krueger report that the operations located in Mexico are well explained by their high labor intensity and low requirements of capital and skilled labor. Industries where there are high US costs of complying with environmental protection standards do not represent a significant portion of those located in Mexico. Other recipients of major amounts of foreign investment, such as China and Brazil, have shown major improvements in air quality.
