Economic policies to foster green growth

Environment and trade: Do stricter environmental policies hurt export competitiveness?



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Brochure - How stringent are environmental policies?

Environmental policies are not a major driver of international trade patterns, even if they still have some significant effects on specialisation. Increasing the stringency of domestic environmental policies does not have a significant effect on overall trade in manufactured goods, but tilts the comparative advantage away from pollution intensive industries. It provides a corresponding advantage in “cleaner” industries. Less stringent policies give an advantage to more pollution intensive production, but at the expense of less polluting industries. Still, the effects are small compared to overall trade developments. 

Increase in  domestic value added in exports 1995-2008, USD billions


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