IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v44y2014icp340-349.html
   My bibliography  Save this article

Is environmental efficiency trade inducing or trade hindering?

Author

Listed:
  • Doganay, Seda Meyveci
  • Sayek, Selin
  • Taskin, Fatma

Abstract

Global efforts to identify strategies for sustainable economic growth and development underline the need for understanding important links between environmental policies and international trade. In this paper, by constructing an environmental efficiency index for 111 countries from 1980 to 2009, we are able to empirically test for one such link. An improvement in the environmental efficiency index in terms of carbon dioxide emissions reflects a decrease in the cost of efforts to mitigate the environmental costs associated with growth. Countries that improve their environmental efficiency are found to experience strong international trade effects, both through increased exports and increased imports. While the positive link between efficiency improvements and exports is supportive of the Porter hypothesis, the positive link between efficiency improvements and imports is supportive of strong positive income effects on account of environmental efforts. These results, which are robust to alternative estimation strategies, lend strong support to global efforts to improve countries' environmental efficiencies.

Suggested Citation

  • Doganay, Seda Meyveci & Sayek, Selin & Taskin, Fatma, 2014. "Is environmental efficiency trade inducing or trade hindering?," Energy Economics, Elsevier, vol. 44(C), pages 340-349.
  • Handle: RePEc:eee:eneeco:v:44:y:2014:i:c:p:340-349 DOI: 10.1016/j.eneco.2014.04.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988314000887
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, pages 170-192.
    2. Brian R. Copeland & M. Scott Taylor, 2004. "Trade, Growth, and the Environment," Journal of Economic Literature, American Economic Association, pages 7-71.
    3. Baldwin, Richard & Taglioni, Daria, 2006. "Gravity for Dummies and Dummies for Gravity Equations," CEPR Discussion Papers 5850, C.E.P.R. Discussion Papers.
    4. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, Elsevier.
    5. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, pages 691-751.
    6. Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, pages 143-153.
    7. Stefan Ambec & Mark A. Cohen & Stewart Elgie & Paul Lanoie, 2013. "The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness?," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, pages 2-22.
    8. Brian R. Copeland & M. Scott Taylor, 2004. "Trade, Growth, and the Environment," Journal of Economic Literature, American Economic Association, pages 7-71.
    9. Song, Malin & An, Qingxian & Zhang, Wei & Wang, Zeya & Wu, Jie, 2012. "Environmental efficiency evaluation based on data envelopment analysis: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(7), pages 4465-4469.
    10. Matthew A. Cole & Robert J. R. Elliott, 2003. "Do Environmental Regulations Influence Trade Patterns? Testing Old and New Trade Theories," The World Economy, Wiley Blackwell, vol. 26(8), pages 1163-1186, August.
    11. Arik Levinson & M. Scott Taylor, 2008. "Unmasking The Pollution Haven Effect," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(1), pages 223-254, February.
    12. 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, July.
    13. Fare, Rolf, et al, 1989. "Multilateral Productivity Comparisons When Some Outputs Are Undesirable: A Nonparametric Approach," The Review of Economics and Statistics, MIT Press, pages 90-98.
    14. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, pages 474-481.
    15. Jerneja Jug & Daniel Mirza, 2005. "Environmental Regulations in Gravity Equations: Evidence from Europe," The World Economy, Wiley Blackwell, pages 1591-1615.
    16. Jean-Marie Grether & Jaime de Melo, 2003. "Globalization and Dirty Industries: Do Pollution Havens Matter?," NBER Working Papers 9776, National Bureau of Economic Research, Inc.
    17. Barıs Yoruk & Osnman Zaim, 2008. "International regulations and environmental performance," Applied Economics, Taylor & Francis Journals, vol. 40(7), pages 807-822.
    18. James E. Anderson, 2011. "The Gravity Model," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 133-160, September.
    19. Xinpeng Xu, 2000. "International Trade and Environmental Regulation: Time Series Evidence and Cross Section Test," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 233-257.
    20. Daniel C. Esty, 2001. "Bridging the Trade-Environment Divide," Journal of Economic Perspectives, American Economic Association, pages 113-130.
    21. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, pages 641-658.
    22. Michael E. Porter & Claas van der Linde, 1995. "Toward a New Conception of the Environment-Competitiveness Relationship," Journal of Economic Perspectives, American Economic Association, pages 97-118.
    23. M A Cole & R J R Elliott, 2003. "Do Environmental Regulations Influence Trade Patterns? Testing New and Old Trade Theories," The School of Economics Discussion Paper Series 0310, Economics, The University of Manchester.
    24. Jack, William & Lagunoff, Roger, 2006. "Dynamic enfranchisement," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 551-572, May.
    25. Mariya Aleksynska & Giovanni Peri, 2014. "Isolating the Network Effect of Immigrants on Trade," The World Economy, Wiley Blackwell, pages 434-455.
    26. repec:ebl:ecbull:v:17:y:2006:i:1:p:1-7 is not listed on IDEAS
    27. repec:clg:wpaper:2008-02 is not listed on IDEAS
    28. Tobey, James A, 1990. "The Effects of Domestic Environmental Policies on Patterns of World Trade: An Empirical Test," Kyklos, Wiley Blackwell, vol. 43(2), pages 191-209.
    29. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, pages 641-658.
    30. Josh Ederington & Jenny Minier, 2003. "Is environmental policy a secondary trade barrier? An empirical analysis," Canadian Journal of Economics, Canadian Economics Association, vol. 36(1), pages 137-154, February.
    31. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, Oxford University Press, vol. 123(2), pages 441-487.
    32. Osman Zaim & Fatma Taskin, 2000. "A Kuznets Curve in Environmental Efficiency: An Application on OECD Countries," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 21-36.
    33. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, pages 379-399.
    34. van Beers, Cees & van den Bergh, Jeroen C J M, 1997. "An Empirical Multi-country Analysis of the Impact of Environmental Regulations on Foreign Trade Flows," Kyklos, Wiley Blackwell, vol. 50(1), pages 29-46.
    35. Josh Ederington & Arik Levinson & Jenny Minier, 2005. "Footloose and Pollution-Free," The Review of Economics and Statistics, MIT Press, pages 92-99.
    36. Mark N. Harris & László Kónya & László Mátyás, 2002. "Modelling the Impact of Environmental Regulations on Bilateral Trade Flows: OECD, 1990-1996," The World Economy, Wiley Blackwell, vol. 25(3), pages 387-405, March.
    37. Baris K. Yörük & Osman Zaim, 2006. "The Kuznets curve and the effect of international regulations on environmental efficiency," Economics Bulletin, AccessEcon, vol. 17(1), pages 1-7.
    38. Mayer, Thierry & Zignago, Soledad, 2006. "Notes on CEPII’s distances measures," MPRA Paper 26469, University Library of Munich, Germany.
    39. Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
    40. Alan Deardorff, 1998. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Chapters,in: The Regionalization of the World Economy, pages 7-32 National Bureau of Economic Research, Inc.
    41. Jon Haveman & David Hummels, 2004. "Alternative hypotheses and the volume of trade: the gravity equation and the extent of specialization," Canadian Journal of Economics, Canadian Economics Association, vol. 37(1), pages 199-218, February.
    42. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, pages 106-116.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Environmental efficiency index; Porter hypothesis; Gravity model;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F18 - International Economics - - Trade - - - Trade and Environment

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:44:y:2014:i:c:p:340-349. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/eneco .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.