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Deforestation, foreign demand and export dynamics in Indonesia

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  • Rodrigue, Joel
  • Soumonni, Omolola

Abstract

This paper presents a dynamic, heterogeneous firm model of investment in environmental abatement and exporting. The model highlights the interaction between firms' environmental investment and export decisions on the evolution of productivity and export demand in timber manufacturing industries. The model is structurally estimated using Indonesian timber manufacturing data that captures firm-level variation in environmental investment and export behavior. The results suggest that environmental abatement has little impact on productivity dynamics, but does encourage growth in export demand. Counterfactual experiments quantify the impact of policy change on trade and abatement decisions.

Suggested Citation

  • Rodrigue, Joel & Soumonni, Omolola, 2014. "Deforestation, foreign demand and export dynamics in Indonesia," Journal of International Economics, Elsevier, vol. 93(2), pages 316-338.
    • Handle: RePEc:eee:inecon:v:93:y:2014:i:2:p:316-338
    DOI: 10.1016/j.jinteco.2014.03.004
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    Cited by:

    1. Damien Dussaux & Francesco Vona & Antoine Dechezleprêtre, 2020. "Carbon Offshoring: Evidence from French Manufacturing Companies," Working Papers hal-03403069, HAL.
    2. Banerjee, Soumendra Nath & Roy, Jayjit & Yasar, Mahmut, 2021. "Exporting and pollution abatement expenditure: Evidence from firm-level data," Journal of Environmental Economics and Management, Elsevier, vol. 105(C).
    3. Cole, Matthew T. & Doremus, Jacqueline M. & Hamilton, Stephen F., 2021. "Import restrictions by eco-certification: Quantity effects on tropical timber production," Journal of Environmental Economics and Management, Elsevier, vol. 107(C).
    4. Damien Dussaux & Francesco Vona & Antoine Dechezleprêtre, 2023. "Imported carbon emissions: Evidence from French manufacturing companies," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(2), pages 593-621, May.
    5. Forslid, Rikard & Okubo, Toshihiro & Ulltveit-Moe, Karen Helene, 2018. "Why are firms that export cleaner? International trade, abatement and environmental emissions," Journal of Environmental Economics and Management, Elsevier, vol. 91(C), pages 166-183.
    6. Wentao, Guo & Hongyu, Nian & Zhiqiang, Zhang, 2025. "How do firms adapt trade liberalization through diverse innovation strategies?," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 304-320.
    7. Hamilton, Stephen & Ouvrard, Benjamin, 2025. "Fair Pricing and Structural Excess Supply," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 360647, Agricultural and Applied Economics Association.
    8. Vera Danilina, 2017. "Trade Integration and the Polarisation of Eco-Labelling Strategies," AMSE Working Papers 1725, Aix-Marseille School of Economics, France.
    9. Brusselaers, Jan & Buysse, Jeroen, 2018. "Implementation of the EU-Cameroon Voluntary Partnership Agreement policy: Trade distortion, rent-seeking and anticipative behavior," Forest Policy and Economics, Elsevier, vol. 90(C), pages 167-179.
    10. Harding, Torfinn & Herzberg, Julika & Kuralbayeva, Karlygash, 2021. "Commodity prices and robust environmental regulation: Evidence from deforestation in Brazil," Journal of Environmental Economics and Management, Elsevier, vol. 108(C).
    11. Youngwoo Rho & Joel Rodrigue, 2016. "Firm‐Level Investment And Export Dynamics," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57(1), pages 271-304, February.
    12. Gutiérrez, Emilio & Teshima, Kensuke, 2018. "Abatement expenditures, technology choice, and environmental performance: Evidence from firm responses to import competition in Mexico," Journal of Development Economics, Elsevier, vol. 133(C), pages 264-274.
    13. repec:spo:wpmain:info:hdl:2441/7j6trda2ip9uja53ghj5qo32rg is not listed on IDEAS
    14. Vera Danilina, 2017. "Polarisation of Eco-Labelling Strategies," Working Papers 2017.26, FAERE - French Association of Environmental and Resource Economists.

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    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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