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International Trade and Environmental Policy: How Effective is 'Eco-Dumping'?

  • Xinpeng Xu

The effects of environmental regulations on the international competitiveness of domestic industries have become an increasing concern in the trade liberalisation process in the 1990s. This paper examines the significance of environmental policy for trade. A generalised GNP function, which incorporates both technology changes and increasing returns to scale is set up and a flexible translog function form is used to approximate this generalised GNP function. Seemingly unrelated regression is employed to estimate a system of sectoral share equations derived from the generalised GNP function. The basic hypothesis is that while the environmental factor is not a significant determinant of the international competitiveness of environmentally sensitive industries, technology is. The result supports this hypothesis and suggests that socalled eco-dumping is not an effective strategy in this context.

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File URL: https://crawford.anu.edu.au/pdf/pep/pep-287.pdf
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Paper provided by Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University in its series Asia Pacific Economic Papers with number 287.

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Length: 25 pages
Date of creation: Jan 1999
Date of revision:
Handle: RePEc:csg:ajrcau:287
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Web page: https://crawford.anu.edu.au/research_units/ajrc/
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  1. James Harrigan, 1996. "Technology, factor supplies, and international specialization: estimating the neoclassical model," Staff Reports 15, Federal Reserve Bank of New York.
  2. James Brander & M. Scott Taylor, 1997. "International Trade Between Consumer and Conservationist Countries," NBER Working Papers 6006, National Bureau of Economic Research, Inc.
  3. Dean, Judith M., 1992. "Trade and the environment : a survey of the literature," Policy Research Working Paper Series 966, The World Bank.
  4. Davies, Stephen W. & McGuinness, Anthony J., 1982. "Dumping at less than marginal cost," Journal of International Economics, Elsevier, vol. 12(1-2), pages 169-182, February.
  5. Markusen, James R., 1995. "Costly pollution abatement, competitiveness, and plant location decisions," Discussion Papers, Series II 260, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
  6. Peter Drysdale, 1998. "Japan's Approach to Asia Pacific Economic Cooperation," Asia Pacific Economic Papers 281, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
  7. Diewert, W E, 1974. "Functional Forms for Revenue and Factor Requirements Functions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 15(1), pages 119-30, February.
  8. Xinpeng Xu, 1998. "Export Performance of Environmentally Sensitive Goods: A Global Perspective?," Asia Pacific Economic Papers 278, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
  9. Ulrich R. Kohli, 1978. "A Gross National Product Function and the Derived Demand for Imports and Supply of Exports," Canadian Journal of Economics, Canadian Economics Association, vol. 11(2), pages 167-82, May.
  10. Schelling, Thomas C, 1992. "Some Economics of Global Warming," American Economic Review, American Economic Association, vol. 82(1), pages 1-14, March.
  11. Rauscher, Michael, 1994. "On Ecological Dumping," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 822-40, Supplemen.
  12. 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.
  13. Mody, Ashoka & Roy, Subhendu & Wheeler, David & Dasgupta, Susmita, 1995. "Environmental regulation and development : a cross-country empirical analysis," Policy Research Working Paper Series 1448, The World Bank.
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