Trade Integration and Political Turbulence Environmental Policy Consequences

25 Pages Posted: 31 Jan 2006

See all articles by Per G. Fredriksson

Per G. Fredriksson

University of Louisville - College of Business - Department of Economics; Institute for Corruption Studies

Muthukumara Mani

World Bank

Date Written: October 2001

Abstract

This paper seeks to contribute to the unresolved issue of the effect of economic integration on environmental policy. In particular, we discuss the joint impact of trade openness and political uncertainty. Our theory predicts that the effect of trade integreation on the environment is conditional on the degree of political uncertainty. Trade integration raises the stringency of environmental policies, but the effect is reduced when the degree of political uncertainty is great. Political uncertainty has a positive effect on environmental policy as it reduces lobbying efforts. Applying our model to a unique data set of primarily developing countries, the empirical findings support the theory and are robust under alterntive specifications.

Keywords: Trade liberalization, political instability, lobbying, uncertainty, environmental regulations

JEL Classification: D72, D78, F13, Q28

Suggested Citation

Fredriksson, Per G. and Mani, Muthukumara, Trade Integration and Political Turbulence Environmental Policy Consequences (October 2001). IMF Working Paper No. 01/150, Available at SSRN: https://ssrn.com/abstract=879962

Per G. Fredriksson (Contact Author)

University of Louisville - College of Business - Department of Economics ( email )

Louisville, KY 40292
United States

Institute for Corruption Studies

Stevenson Hall 425
Normal, IL 61790-4200
United States

Muthukumara Mani

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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