Modelling the Impact of Environmental Regulations on Bilateral Trade Flows: OECD, 1990-1996
Abstract
Since the early seventies an increasing attention has been paid to the impact environmental polict nmight have on foreign trade. One of the most important issues is whether countries with relatively strict environmental regulations tend to experience a deterioration of international competitiveness and thus a fall in exports and a rise in imports, of the pollution-intensive commodities or, on the other hand, benefit from the improvement in environmentally more sensitive industries. So far, most empirical studies have concluded that the proportion of environmental costs to the total production costs is still so marginal that environmental policies have hardly any effect on comparative advantage patterns and thus on foreign trade. One of the few exceptions is Van Beers and Van den Bergh (1997), who found that stricter regulations have some negative impact on bilateral trade flows between OECD countries. The aim of this paper is to show that tyhis outcome is partly due to model mis-specification. The analysis id based on a triple indexed model and on its variants. It is found that, as soon as both the importing and exporting country specific effects are taken into consideration, the relationship between stricter regulations and foreign trade becomes statistically insignificant. This suggests that environmental costs do not have a real impact, neither negative nor positive, on foreign trade. Copyright Blackwell Publishers Ltd 2002.Download Info
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Bibliographic Info
Article provided by Wiley Blackwell in its journal The World Economy.
Volume (Year): 25 (2002)
Issue (Month): 3 (03)
Pages: 387-405
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Drogue, Sophie & DeMaria, Federica, 2011.
"Pesticides Residues and Trade: the Apple of Discord?,"
2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland
114445, European Association of Agricultural Economists.
- Drogué, Sophie & DeMaria, Federica, 2012. "Pesticide residues and trade, the apple of discord?," Food Policy, Elsevier, vol. 37(6), pages 641-649.
- Konya, Laszlo & Matyas, Laszlo & Harris, Mark, 2011. "GATT/WTO membership does promote international trade after all – Some new mmpirical evidence," MPRA Paper 34978, University Library of Munich, Germany, revised 20 Nov 2011.
- Felix Groba, 2011. "Determinants of Trade with Solar Energy Technology Components: Evidence on the Porter Hypothesis?," Discussion Papers of DIW Berlin 1163, DIW Berlin, German Institute for Economic Research.
- Roberta De Santis, 2012.
"Impact of Environmental Regulations on Trade in the Main EU Countries: Conflict or Synergy?,"
The World Economy,
Wiley Blackwell, vol. 35(7), pages 799-815, 07.
- de santis, roberta, 2011. "Impact of environmental regulations on trade in the main EU countries: conflict or synergy?," MPRA Paper 37756, University Library of Munich, Germany.
- Drogué, S. & DeMaria, F., 2012. "« Comparing apples with pears. How differences in pesticide residues regulations impact trade? »," Working Papers MOISA 201201, UMR MOISA : Marchés, Organisations, Institutions et Stratégies d'Acteurs : CIHEAM-IAMM, CIRAD, INRA, Montpellier SupAgro, IRD - Montpellier, France.
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