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International Competition and Environmental Expenditures: Empirical Evidence from Indonesian Manufacturing Plants

  • Kaiser, Kai
  • Schulze, Günther G.

This paper analyzes environmental expenditures in Indonesia – a significant newly industrializing economy – reported at the plant level comprising all 23 thousand manufacturing establishments with more than 20 employees. Since compliance is barely enforced, pollution abatement expenditures are effectively voluntary in nature. This allows us to test whether foreign owned firms expend more due to a technology that adheres to stricter Western standards or whether the predominant effect is that both foreign and domestic exporting companies are more environmentally conscious due to better technology transfer or green consumerism in the Western countries. If so, this would contradict conventional wisdom that environmental expenditures reduce competitiveness and that increased levels of foreign direct investment or export-orientation in manufacturing will necessarily pre-empt firms from behaving in a ?greener? fashion.

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File URL: http://econstor.eu/bitstream/10419/19163/1/222.pdf
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Paper provided by Hamburg Institute of International Economics (HWWA) in its series HWWA Discussion Papers with number 222.

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Date of creation: 2003
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Handle: RePEc:zbw:hwwadp:26255
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Web page: http://www.econstor.eu/handle/10419/20
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  1. Hua Wang & Yanhong Jin, 2007. "Industrial Ownership and Environmental Performance: Evidence from China," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 36(3), pages 255-273, March.
  2. McGuire, Martin C., 1982. "Regulation, factor rewards, and international trade," Journal of Public Economics, Elsevier, vol. 17(3), pages 335-354, April.
  3. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  4. Levinson, Arik, 1996. "Environmental regulations and manufacturers' location choices: Evidence from the Census of Manufactures," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 5-29, October.
  5. Hua Wang & Nlandu Mamingi & Benoit Laplante & Susmita Dasgupta, 2003. "Incomplete Enforcement of Pollution Regulation: Bargaining Power of Chinese Factories," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 24(3), pages 245-262, March.
  6. Ulph, Alistair, 1996. "Environmental Policy and International Trade when Governments and Producers Act Strategically," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 265-281, May.
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