Environmental Regulation and Competitiveness: Evidence from Romania
Guglielmo Maria Caporale (),
Christophe Rault (),
Robert Aurelian Sova () and
Anamaria Sova ()
Additional contact information Guglielmo Maria Caporale: Brunel University
Anamaria Sova: E.B.R.C. Bucharest
According to the pollution haven hypotheses differences in environmental regulation affect trade flows and plant location. Specifically, environmental stringency should decrease exports and increase imports of "dirty" goods. This paper estimates a gravity model to establish whether the implementation of more stringent regulations in Romania has indeed affected its competitiveness and decreased exports towards its European trading partners. Our findings do not provide empirical support to the pollution haven hypothesis, i.e. environmental stringency is not found to affect significantly total trade, or its components (pollution intensive trade and pollution intensive trade related to non-resource-based trade).