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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Friebel, Guido / Mendola, Mariapia / Requate, Till / Tsui, Kevin / Wichardt, Philipp / Zulehner, Christine

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Trade Integration and Political Turbulence: Environmental Policy Consequences

Per G Fredriksson1 / Muthukumara Mani2

1Southern Methodist University,

2The World Bank,

Citation Information: Advances in Economic Analysis & Policy. Volume 3, Issue 2, ISSN (Online) 1538-0637, DOI: 10.2202/1538-0637.1215, February 2004

Publication History

Published Online:
2004-02-20

Abstract

This paper contributes to the unresolved issue regarding the effect of economic integration on environmental policymaking. In particular, we discuss the joint impact of trade openness and political stability on environmental policymaking. Our theory predicts that the effect of trade integration on environmental policy is conditional on the degree of political stability. Trade integration affects the stringency of environmental policies due to changes in industry bribery behavior, and the effect is conditional on the degree of political stability. The empirical findings support the theory and are robust to alternative specifications. The stringency enhancing effect on environmental policy of trade integration is greater in politically stable countries.

Keywords: Trade liberalization; environmental regulations; political instability; pollution haven; trade policy

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