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Dirty exports and environmental regulation : do standards matter to trade?

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Author Info

  • Wilson, John S.
  • Tsunehiro Otsuki
  • Sewadeh, Mirvat

Abstract

How to address the link between environmental regulation and trade was an important part of discussions at the World Trade Organization Ministerial in Doha, Qatar in November 2001. Trade ministers agreed to launch negotiations on trade and the environment, specifically clarification of WTO rules. The authors address an important part of the background context for deciding whether or how to link trade agreements to the environment from a developing country perspective.The authors ask whether environmental regulations affect exports of pollution-intensive or"dirty"goods in 24 countries between 1994 and 1998. Based on a Heckscher-Ohlin-Vanek (HOV) model, net exports in five pollution-intensive industries are regressed on factor endowments and measures of environmental standards (legislation in force). The results suggest that, if country heterogeneity such as enforcement of environmental regulations is controlled for, more stringent environmental standards imply lower net exports of metal mining, nonferrous metals, iron, and steel and chemicals. The authors find find that a trade agreement on a common environmental standard will cost a non-OECD country substantially more than an OECD country. Developing countries will, on average, reduce exports of the five pollution-intensive products by 0.37 percent of GNP. This represents 11 percent of annual exports of these products from the 24 studied countries.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2806.

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Date of creation: 31 Mar 2002
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Handle: RePEc:wbk:wbrwps:2806

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Keywords: Water and Industry; Economic Theory&Research; Public Health Promotion; Environmental Economics&Policies; Sanitation and Sewerage; Environmental Economics&Policies; Water and Industry; Environmental Governance; Economic Theory&Research; Health Monitoring&Evaluation;

References

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  1. Gene M. Grossman & Alan B. Krueger, 1991. "Environmental Impacts of a North American Free Trade Agreement," NBER Working Papers 3914, National Bureau of Economic Research, Inc.
  2. Keith E. Maskus, 1991. "Comparing International Trade Data and Product and National Characteristics Data for the Analysis of Trade Models," NBER Chapters, in: International Economic Transactions: Issues in Measurement and Empirical Research, pages 17-60 National Bureau of Economic Research, Inc.
  3. Wayne B. Gray, 1997. "Manufacturing Plant Location: Does State Pollution Regulation Matter?," NBER Working Papers 5880, National Bureau of Economic Research, Inc.
  4. Werner Antweiler & Brian R. Copeland & M. Scott Taylor, 2001. "Is Free Trade Good for the Environment?," American Economic Review, American Economic Association, vol. 91(4), pages 877-908, September.
  5. Susmita Dasgupta & Ashoka Mody & Subhendu Roy & David Wheeler, 2001. "Environmental Regulation and Development: A Cross-country Empirical Analysis," Oxford Development Studies, Taylor & Francis Journals, vol. 29(2), pages 173-187.
  6. Dean, Judith M., 1992. "Trade and the environment : a survey of the literature," Policy Research Working Paper Series 966, The World Bank.
  7. List, John A. & Co, Catherine Y., 2000. "The Effects of Environmental Regulations on Foreign Direct Investment," Journal of Environmental Economics and Management, Elsevier, vol. 40(1), pages 1-20, July.
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Cited by:
  1. Olper, Alessandro & Raimondi, Valentina, 2002. "Elasticity of trade flow to trade barriers: A comparison among emerging estimation techniques," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44119, European Association of Agricultural Economists.
  2. Elif Akbostanci & G.Ipek Tunç & Serap Türüt-Asik, 2004. "Pollution Haven Hypothesis and the Role of Dirty Industries in Turkey’s Exports," ERC Working Papers 0403, ERC - Economic Research Center, Middle East Technical University, revised Feb 2004.
  3. Lawn, Philip & Clarke, Matthew, 2010. "The end of economic growth? A contracting threshold hypothesis," Ecological Economics, Elsevier, vol. 69(11), pages 2213-2223, September.
  4. Busse, Matthias, 2004. "Trade, environmental regulations and the World Trade Organization : new empirical evidence," Policy Research Working Paper Series 3361, The World Bank.

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