The Impact of Environmental Regulations on Trade Flows: A Focus on Environmental Goods Listed in APEC and OECD

Abstract

This paper aims to investigate the impact of environmental regulations on trade patterns, in terms of trade in environmental goods listed in Asia-Pacific Economic Cooperation (APEC) and Organization for Economic Co-operation and Development (OECD). Environmental goods are defined here as those that enable sustainable growth and reduce pollution from human activity. For this reason, issues on environmental goods can be put at the forefront to analyze the linkage between environmental regulations and trade flows in the perspective of international institutions. Within the framework of a gravity model, panel data on 112 exporter countries and 53 importer countries is used at a bilateral level over the period of 1989–2013 to gain an understanding of this trade-environmental regulation nexus. This paper proxies the environmental policies by employing the z-score, which includes three comprehensive environmental indicators. The findings indicate that the strict environmental policies impede the trade, and this effect is greater in terms of the environmental goods listed in APEC compared to the ones listed in OECD. Finally, although these stringent environmental regulations reduce the trade flows, they can help to foster the demand for environmentally-friendly products.

The Nexus between Environmental Quality, Economic Growth, and Trade Openness in Saudi Arabia (1990-2017)

“…In contrast, Dai et al (2021) applied the gravity model and the z-score to examine the trade-environmental regulation nexus in 112 exporting countries and 53 importing countries over the period 1989-2013. Their findings revealed that the strict environmental policies harm trade.…”

Environmental protection tax, corporate ESG performance, and green technological innovation

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Impact of Environmental Protection Regulations on Corporate Performance From Porter Hypothesis Perspective: A Study Based on Publicly Listed Manufacturing Firms Data

“…Two different views exist in parallel. In the traditional view, environmental regulations impose various restrictions on companies' existing pollutant discharge behaviors, which inevitably lead to increased costs for companies, thereby reducing corporate profits and performance (Rassier and Earnhart, 2010;Greenstone et al, 2012;Dai et al, 2021). Some studies have supported this view (Yu et al, 2021).…”