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Environmental Regulation and International Competitiveness: A Review of Literature and Some European Evidence

  • Jenkins, Rhys

    (School of Development Studies, University of East Anglia)

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    The impact of environmental regulation on competitiveness is a major issue of concern to policy makers. It has also been the subject of considerable academic debate in the last few years between those who see an inherent conflict between the protection of the environment and international competitiveness, and those who believe that environmental regulation can in fact improve economic performance. The efforts to clarify the linkages between environmental regulation and competitiveness are still rudimentary, and it has not been possible to determine conclusively which are the main variables which intervene in the relationship. The evidence presented in this paper illustrate that environmental regulation is only one of a number of factors which may have an impact on competitiveness and a full analysis would require a much more detail consideration of the impact of other factors. It is suggested that this reflects the differing impact which environmental regulation may have on economic performance under different circumstances. For instance at the firm level the impact on profitability may be different between large firms, which can take advantage of economies of scale in waste treatment, and small firms where large cost increases may result. Similarly at the industry level there is apparently no general relationship between environmental regulation and competitiveness. Some industries which have high pollution abatement costs appear to be losing competitiveness within the European Union, while others have been able to maintain or even gain competitiveness. The impact of environmental regulation on competitiveness may differ according to certain structural or market characteristics of the industries concerned.

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    File URL: http://www.intech.unu.edu/publications/discussion-papers/9801.pdf
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    Paper provided by United Nations University - INTECH in its series UNU-INTECH Discussion Paper Series with number 01.

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    Date of creation: 1998
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    Handle: RePEc:unm:unuint:199801
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    1. Yuquing Xing & Charles Kolstad, 2002. "Do Lax Environmental Regulations Attract Foreign Investment?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 21(1), pages 1-22, January.
    2. Karen Palmer & Wallace E. Oates & Paul R. Portney, 1995. "Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 119-132, Fall.
    3. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
    4. Low, P., 1992. "International Trade and the Environment," World Bank - Discussion Papers 159, World Bank.
    5. Grossman, Gene & Krueger, Alan B, 1992. "Environmental Impacts of a North American Free Trade Agreement," CEPR Discussion Papers 644, C.E.P.R. Discussion Papers.
    6. H. David Robison, 1988. "Industrial Pollution Abatement: The Impact on Balance of Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 21(1), pages 187-99, February.
    7. Wayne B Gray & Ronald J Shadbegian, 1993. "Environmental Regulation And Manufacturing Productivity At The Plant Level," Working Papers 93-6, Center for Economic Studies, U.S. Census Bureau.
    8. 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.
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