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Environmental Regulation and Competitiveness: Evidence from Romania

  • Caporale, Guglielmo Maria


    (Brunel University)

  • Rault, Christophe


    (University of Orléans)

  • Sova, Robert


    (CREST & University of Paris 1 Panthéon-Sorbonne)

  • Sova, Anamaria


    (E.B.R.C. Bucharest)

According to the pollution haven hypotheses differences in environmental regulation affect trade flows and plant location. Specifically, environmental stringency should decrease exports and increase imports of "dirty" goods. This paper estimates a gravity model to establish whether the implementation of more stringent regulations in Romania has indeed affected its competitiveness and decreased exports towards its European trading partners. Our findings do not provide empirical support to the pollution haven hypothesis, i.e. environmental stringency is not found to affect significantly total trade, or its components (pollution intensive trade and pollution intensive trade related to non-resource-based trade).

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5029.

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Length: 22 pages
Date of creation: Jun 2010
Date of revision:
Publication status: published in: Ecological Economics, 2012, 81, 130-139
Handle: RePEc:iza:izadps:dp5029
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