Environmental Regulation and Competitiveness

Abay Mulatu, Raymond J.G.M. Florax, Cees A.A.M. Withagen

    Research output: Contribution to journalArticlepeer-review


    The potential relationship between domestic environmental regulation and international competitiveness has evoked various speculations. The common neoclassical train of thought is that strict environmental regulation is detrimental to the competitiveness of industry, and that it induces phenomena such as ecological dumping, ecological capital flight, and regulatory 'chill' in environmental standards. A different view is that strict environmental regulation triggers industry's innovation potential, and subsequently increases its competitiveness. The impact of environmental regulation on competitiveness has been analyzed in terms of international capital movements, new firm formation, and international trade. This paper focuses on a statistically rigorous analysis of international trade studies, using a technique that is known as meta-analysis. The paper presents a statistically supported evaluation of the literature, in order to assess what the main conclusions regarding the relationship between environmental regulation and competitiveness are when it comes to studies on international trade flows. The synthesis of the literature is subsequently used to present guidelines for future primary research in this area.
    Original languageEnglish
    Pages (from-to)1-39
    Number of pages39
    JournalTinbergen Institute Discussion Papers
    Issue numberNo 01-039/3
    Publication statusPublished - 4 Apr 2001


    • environmental policy
    • strictness
    • competitiveness
    • meta-analysis


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