International Competition and Environmental Expenditures: Empirical Evidence from Indonesian Manufacturing Plants

26 Pages Posted: 24 Jun 2003

See all articles by Kai Kaiser

Kai Kaiser

World Bank - Indonesia Resident Mission

Gunther G. Schulze

University of Freiburg - Department of Economics

Date Written: 2003

Abstract

This paper analyzes environmental expenditures in Indonesia - a significant newly industrializing economy - reported at the plant level comprising all 23 thousand manufacturing establishments with more than 20 employees. Since compliance is barely enforced, pollution abatement expenditures are effectively voluntary in nature. This allows us to test whether foreign owned firms expend more due to a technology that adheres to stricter Western standards or whether the predominant effect is that both foreign and domestic exporting companies are more environmentally conscious due to better technology transfer or green consumerism in the Western countries. If so, this would contradict conventional wisdom that environmental expenditures reduce competitiveness and that increased levels of foreign direct investment or export-orientation in manufacturing will necessarily preempt firms from behaving in a "greener" fashion.

Keywords: Environmental regulation, competitiveness, multinational enterprises, green consumerism, export performance, Indonesia

JEL Classification: F1, Q1

Suggested Citation

Kaiser, Kai and Schulze, Gunther G., International Competition and Environmental Expenditures: Empirical Evidence from Indonesian Manufacturing Plants (2003). Available at SSRN: https://ssrn.com/abstract=395780 or http://dx.doi.org/10.2139/ssrn.395780

Kai Kaiser

World Bank - Indonesia Resident Mission ( email )

JI. Jenderal Sudirman Kav. 52-53
Jakarta 12190
Indonesia

Gunther G. Schulze (Contact Author)

University of Freiburg - Department of Economics ( email )

Platz der Alten Synagoge
D-79085 Freiburg
Germany

HOME PAGE: http://www.vwl.uni-freiburg.de/fakultaet/sopo/index.html

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
177
Abstract Views
1,334
rank
210,710
PlumX Metrics