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International Competition and Environmental Expenditures: Empirical Evidence from Indonesian Manufacturing Plants

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  • Kaiser, Kai
  • Schulze, Günther G.

Abstract

This paper analyzes environmental expenditures in Indonesia – a significant newly industrializing economy – reported at the plant level comprising all 23 thousand manufacturing establishments with more than 20 employees. Since compliance is barely enforced, pollution abatement expenditures are effectively voluntary in nature. This allows us to test whether foreign owned firms expend more due to a technology that adheres to stricter Western standards or whether the predominant effect is that both foreign and domestic exporting companies are more environmentally conscious due to better technology transfer or green consumerism in the Western countries. If so, this would contradict conventional wisdom that environmental expenditures reduce competitiveness and that increased levels of foreign direct investment or export-orientation in manufacturing will necessarily pre-empt firms from behaving in a ?greener? fashion. --

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Bibliographic Info

Paper provided by Hamburg Institute of International Economics (HWWA) in its series HWWA Discussion Papers with number 222.

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Date of creation: 2003
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Handle: RePEc:zbw:hwwadp:26255

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Web page: http://www.econstor.eu/handle/10419/20
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Related research

Keywords: Environmental regulation; competitiveness; multinational enterprises; green consumerism; export performance; Indonesia;

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References

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  1. Ulph, Alistair, 1996. "Environmental Policy and International Trade when Governments and Producers Act Strategically," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 265-281, May.
  2. Hua Wang & Mamingi, Nlandu & Laplante, Benoit & Dasgupta, Susmita, 2002. "Incomplete enforcement of pollution regulation : bargaining power of Chinese factories," Policy Research Working Paper Series 2756, The World Bank.
  3. McGuire, Martin C., 1982. "Regulation, factor rewards, and international trade," Journal of Public Economics, Elsevier, vol. 17(3), pages 335-354, April.
  4. Levinson, Arik, 1996. "Environmental regulations and manufacturers' location choices: Evidence from the Census of Manufactures," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 5-29, October.
  5. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  6. Hua Wang & Yanhong Jin, 2007. "Industrial Ownership and Environmental Performance: Evidence from China," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 36(3), pages 255-273, March.
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Cited by:
  1. Svetlana Batrakova & Ronald Davies, 2010. "Is there an environmental benefit to being an exporter? Evidence from firm level data," The Institute for International Integration Studies Discussion Paper Series iiisdp322, IIIS, revised Mar 2010.
  2. Dannenberg, Astrid & Mennel, Tim & Moslener, Ulf, 2007. "What Does Europe Pay for Clean Energy? Review of Macroeconomic Simulation Studies," ZEW Discussion Papers 07-019, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Stefanie Haller & Liam Murphy, 2012. "Corporate Expenditure on Environmental Protection," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 51(2), pages 277-296, February.
  4. John P. Weche Geluebcke & Isabella Wedl, 2013. "Environmental Protection of Foreign Firms in Germany: Does the country of origin matter?," Working Paper Series in Economics 267, University of Lüneburg, Institute of Economics.

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