Environmental Regulation and Competitiveness: Evidence from Romania
Guglielmo Maria Caporale
London South Bank University; Brunel University - Brunel Business School; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
University of Orleans; Université d'Évry - Centre D'Etudes des Politiques Economiques et de L'Emploi (EPEE); Université Paris I Panthéon-Sorbonne - Equipe Universitaire de Recherche en Economie Quantitative (EUREQUA); Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
Academy of Economic Studies; Université Paris I Panthéon-Sorbonne - Centre Maison des Sciences Economiques
Bucharest Academy of Economic Studies; CES Sorbonne University
IZA Discussion Paper No. 5029
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).
Number of Pages in PDF File: 22
Keywords: environmental stringency, competiveness, gravity model
JEL Classification: F14, Q28working papers series
Date posted: July 6, 2010
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