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The Effects of Domestic Environmental Policies on Patterns of World Trade: An Empirical Test

The Effects of Domestic Environmental Policies on Patterns of World Trade: An Empirical Test I. INTRODUCTION In theory, environmental control costs encourage reduced specialization in the production of polluting outputs in countries with stringent 1976; SIEBERT, ; MCGUIRE, 1977 environmental regulations [PETHIG, 19821. In contrast, countries that fail to undertake an environmental protection program presumably increase their comparative advantage in the production of items that damage the environment. This relationship between trade and environmental policy receives considerable attention whenever countries are in the process of passing new pollution control measures. Groups who oppose existing measures, or the implementation of stiffer measures, argue that they reduce the ability of polluting industries to compete internationally I . With foreign trade an increasingly important sector in many of the world’s economies, the arguments of such groups are now frequently weighted very heavily. The premise that trade suffers from the imposition of environmental policy has a strong element of a priori plausibility but, surprisingly, has little empirical support. Several macroeconometric models [D’ARGE, 1974; ROBISON, 1986; OECD, 19851 have predicted that * Affiliated with the United States Department of Agriculture, Economic Research Service, Research and Technology Division. This paper does not necessarily represent the views of the Department of Agriculture. I am very grateful for the thoughtful http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Kyklos International Review of Social Sciences Wiley

The Effects of Domestic Environmental Policies on Patterns of World Trade: An Empirical Test

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References (11)

Publisher
Wiley
Copyright
Copyright © 1990 Wiley Subscription Services, Inc., A Wiley Company
ISSN
0023-5962
eISSN
1467-6435
DOI
10.1111/j.1467-6435.1990.tb00207.x
Publisher site
See Article on Publisher Site

Abstract

I. INTRODUCTION In theory, environmental control costs encourage reduced specialization in the production of polluting outputs in countries with stringent 1976; SIEBERT, ; MCGUIRE, 1977 environmental regulations [PETHIG, 19821. In contrast, countries that fail to undertake an environmental protection program presumably increase their comparative advantage in the production of items that damage the environment. This relationship between trade and environmental policy receives considerable attention whenever countries are in the process of passing new pollution control measures. Groups who oppose existing measures, or the implementation of stiffer measures, argue that they reduce the ability of polluting industries to compete internationally I . With foreign trade an increasingly important sector in many of the world’s economies, the arguments of such groups are now frequently weighted very heavily. The premise that trade suffers from the imposition of environmental policy has a strong element of a priori plausibility but, surprisingly, has little empirical support. Several macroeconometric models [D’ARGE, 1974; ROBISON, 1986; OECD, 19851 have predicted that * Affiliated with the United States Department of Agriculture, Economic Research Service, Research and Technology Division. This paper does not necessarily represent the views of the Department of Agriculture. I am very grateful for the thoughtful

Journal

Kyklos International Review of Social SciencesWiley

Published: May 1, 1990

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