In this paper, we have used new international data to investigate the relationship between industrial pollution and economic development. We find that the manufacturing share follows a Kuznets-type trajectory, but the other two determinants do not.
Sectoral composition gets 'cleaner' through middle-income status and then stabilizes.
We attribute part of this to stricter regulation as income increases, and partly to pollution-labor complementarity in production. Our findings motivate two illustrative simulation exercises. In three counterfactual experiments, we assess the relative importance of the three proximate determinants. The combined influence of changes in manufacturing share and sectoral composition is lower by almost two orders of magnitude. During the 1980's, our estimates suggest that the latter group displaced the major OECD economies as the world's largest generator of organic water pollution.