Estimating the effect of chemical safety standards on firm performance in Malaysia and Vietnam

Otsuki Tsunehiro, Etsuyo Michida, Kaoru Nabeshima and Yasushi Ueki

No 455, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: This paper uses firm-level data to examine the impact of chemical safety regulations imposed by importing countries such as RoHS and REACH on the production costs and export performance of firms in Malaysia and Vietnam. We find that in addition to the initial setup costs for compliance, EU RoHS and REACH implementation causes firms to incur additional variable production costs by requiring additional labor and capital expenditures of around 12% of the variable costs, respectively. We also find that compliance with RoHS and REACH significantly increases the probability of export. Furthermore, we find that compliance with EU RoHS and REACH helps firms to penetrate into a greater variety of countries. Also, we find that multinational enterprises and firms participating in global value chains generally exhibit better export performance and their costs rise less steeply.

Keywords: Malaysia; Vietnam; Environmental protection; International trade; Environmental policy; Industrial standards; Costs; Trade; RoHS; REACH cost function; Market access (search for similar items in EconPapers)
JEL-codes: F14 L15 O53 (search for similar items in EconPapers)
Date: 2014-03-01
New Economics Papers: this item is included in nep-env, nep-ger, nep-int and nep-sea
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Citations: View citations in EconPapers (2)

Published in IDE Discussion Paper = IDE Discussion Paper, No. 455. 2014-03-01

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