In this paper, I argue the compositional shift from agricultural to
industrial production – industrialization – is a central determinant
of changes in environmental quality as economies develop.
I develop a simple two-sector model of neoclassical growth and
the environment in a small open economy to examine how industrialization
affects the environment. The model is estimated using
sulfur emissions data for 157 countries over the period 1970–2000.
The results show the process of industrialization is a significant
determinant of observed changes in emissions: a 1% increase in
industry’s share of total output is associated with an 11.8% increase
in the level of emissions per capita