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International Trade and Environmental Regulation: Time Series Evidence and Cross Section Test

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Abstract

This paper examines empiricallywhether more stringent domestic environmental policiesreduce the international competitiveness ofenvironmentally sensitive goods (ESGs). Our timeseries evidence indicates that there are no systematicchanges in trade patterns of ESGs in the last threedecades, despite the introduction of more stringentenvironmental regulations in most of the developedcountries in the 1970s and 1980s. This observedphenomenon is then subjected to a multi-countryeconometric test using an extended gravity-equationframework. The test suggests that, overall, morestringent environmental regulations do not reducetotal exports, exports of ESGs and exports ofnon-resource-based ESGs. Neither was there anyevidence to support the hypothesis that new tradebarriers emerge to offset the effects of morestringent environmental regulations.

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Authors and Affiliations

  1. Department of Business Studies, Hong Kong Polytechnic University, Hong Kong

    Xinpeng Xu

  2. Hong Kong and Australia Japan Research Centre, The Australian National University, Japan

    Xinpeng Xu

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  1. Xinpeng Xu
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Xu, X. International Trade and Environmental Regulation: Time Series Evidence and Cross Section Test. Environmental and Resource Economics 17, 233–257 (2000). https://doi.org/10.1023/A:1026428806818

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