INTERNATIONAL TRADE AND EVNVIRONMENTAL POLICY: HOW EFFECTIVE IS ‘ECO-DUMPING’?

Xinpeng Xu
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Xinpeng Xu: AJRC

Trade Working Papers from East Asian Bureau of Economic Research

Abstract: The effects of environmental regulations on the international competitiveness of domestic industries have become an increasing concern in the trade liberalisation process in the 1990s. This paper examines the significance of environmental policy for trade. A generalised GNP function, which incorporates both technology changes and increasing returns to scale is set up and a flexible translog function form is used to approximate this generalised GNP function. Seemingly unrelated regression is employed to estimate a system of sectoral share equations derived from the generalised GNP function. The basic hypothesis is that while the environmental factor is not a significant determinant of the international competitiveness of environmentally sensitive industries, technology is. The result supports this hypothesis and suggests that socalled eco-dumping is not an effective strategy in this context.

Keywords: environmental regulations; Trade Liberalisation; GNP (search for similar items in EconPapers)
JEL-codes: F14 F18 O13 (search for similar items in EconPapers)
Date: 1999-01
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