Africa Institute for Research in Economics and Social Sciences is organizing a seminar on Thursday, May 18th, 2023 at 12:30 p.m at Mohammed VI Polytechnic University - Rabat Campus (B-B1-01) on ''What Type of Trade is Promoted by Environmental Regulations?''.
Our guest speaker for this event is Chahir Zaki, Professor at the Faculty of Economics and Political Science of Cairo University, Egypt.
The objective of this paper is to investigate the extent to which international trade is affected by environmental stringency. The impact of environmental regulations on exports is evaluated using a gravity model of trade, which is estimated for a global sample of countries over the period from 1995 to 2015, distinguishing between clean, footloose, and dirty products. This enables us to investigate whether more stringent environmental provisions in trade agreements and environmental laws lead developed countries to move away from dirty production and exports that are going to be relocated in developing countries, as predicted by the Pollution Haven hypothesis. Data on environmental provisions that are legally enforceable is obtained from the Deep Trade Agreement dataset (World Bank) and environmental laws and treaties are from Ecolex. Our results show a decrease in trade of “normal” goods, but not those of the dirty and footloose products. When focusing on the combination with legislation, only national laws seem to be working. Indeed, environmental provisions and domestic legislation do exert a significant effect on trade. Additionally, when analyzing the environmental provision depth by country groups, we confirm that strictness in environmental regulation reinforce the PHH with the provisions increasing exports of NON-OECD and decreasing on those of OECD in dirty products.