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The Impact of Environmental Policy on Foreign Trade: Tobey revisited with a Bilateral Flow Model

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  • Cees van Beers

    (Delft University of Technology)

  • Jeroen C.J.M. van den Bergh

    (Vrije Universiteit Amsterdam)

Abstract

We consider the microfoundations controversy from the perspective of economic evolution. Although the analogy between biology and economics has been noted before, it has rarely focused on clarifying the micro–macro distinction in economic theory and modelling. The micro–macro debate is more developed in biology than in economics owing to a greater degree of specialisation and a greater degree of interaction between various sub-disciplines. The task for economists is to distinguish between insights directly relevant for economic theory and ones that hinge on unique features of biological systems. We argue that both micro and macro processes drive economic change and that macroeconomic change cannot be explained by microlevel optimising alone. We show that debates in biology about group selection and punctuated equilibria are relevant to understanding economic evolution. The opposition of reductionism and holism is of little use and, in its place, a hierarchical approach is proposed. This allows for both upward and downward causation and interaction between levels.

Suggested Citation

  • Cees van Beers & Jeroen C.J.M. van den Bergh, 2000. "The Impact of Environmental Policy on Foreign Trade: Tobey revisited with a Bilateral Flow Model," Tinbergen Institute Discussion Papers 00-069/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20000069
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    References listed on IDEAS

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    1. Elhanan Helpman, 1999. "The Structure of Foreign Trade," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 121-144, Spring.
    2. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    3. Xinpeng Xu & Ligang Song, 2000. "Regional cooperation and the environment: Do “dirty” industries migrate?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(1), pages 137-157, March.
    4. James A. Tobey, 1990. "The Effects of Domestic Environmental Policies on Patterns of World Trade: An Empirical Test," Kyklos, Wiley Blackwell, vol. 43(2), pages 191-209, May.
    5. Jeroen C.J.M. van den Bergh (ed.), 1999. "Handbook of Environmental and Resource Economics," Books, Edward Elgar Publishing, number 801.
    6. Cees Van Beers & Jeroen C. J. M. Van Den Bergh, 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, February.
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    Cited by:

    1. Arouri, Mohamed El Hedi & Caporale, Guglielmo Maria & Rault, Christophe & Sova, Robert & Sova, Anamaria, 2012. "Environmental Regulation and Competitiveness: Evidence from Romania," Ecological Economics, Elsevier, vol. 81(C), pages 130-139.
    2. Fangmiao Hou & Wei Su & Shiyi Cheng & Chengliang Wu & Yuguo Lin, 2023. "The Impact of Environmental Regulation on Hebei’s Manufacturing Industry in the Global Value Chain," IJERPH, MDPI, vol. 20(4), pages 1-13, February.
    3. Mahvash Saeed Qureshi, 2006. "Trade Liberalization, Environment and Poverty: A Developing Country Perspective," WIDER Working Paper Series RP2006-45, World Institute for Development Economic Research (UNU-WIDER).
    4. Jérôme Trotignon, 2010. "La restriction des émissions de CO2 pénalise-t-elle les exportations ? Un modèle de gravité avec données de panel et variables muettes régionales," Post-Print halshs-00477244, HAL.
    5. Trotignon, Jérôme, 2010. "La Restriction des émissions de CO2 pénalise-t-elle les exportations? Un modèle de gravité avec données de panel et variables muettes régionales," L'Actualité Economique, Société Canadienne de Science Economique, vol. 86(1), pages 5-33, mars.
    6. Bassem Kahouli & Anis Omri & Anissa Chaibi, 2014. "Environmental Regulations, Trade, and Foreign Direct Investment: Evidence from Gravity Equations," Working Papers 2014-189, Department of Research, Ipag Business School.
    7. Kahouli, Bassem & Omri, Anis, 2017. "Foreign direct investment, foreign trade and environment: New evidence from simultaneous-equation system of gravity models," Research in International Business and Finance, Elsevier, vol. 42(C), pages 353-364.
    8. 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.
    9. Peter Egger & Christoph Jeßberger & Mario Larch, 2011. "Trade and investment liberalization as determinants of multilateral environmental agreement membership," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(6), pages 605-633, December.

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    Keywords

    Evolutionary biology; Group selection; Hierarchical causation; Punctuated equilibrium • Sorting;
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