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Trade Competition and Environmental Regulations: Domestic Political Constraints and Issue Visibility

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Abstract

How do domestic political institutions, specifically veto players, mediate the effect of trade competition on regulatory races in the environmental area? Is the mediating effect more pronounced for more visible pollution issues such as air pollution in relation to less visible water pollution? Governments are expected to respond to trade pressures by lowering regulatory costs. To do so, governments can rewrite regulations (de jure policy change) and/or lower the enforcement of existing regulations (de facto policy change). In contrast with de facto changes, de jure policy changes are more likely to invite opposition from pro-environment constituencies, and are therefore politically more difficult. Our analysis of 140 countries for the period 1980–2003 suggests that in response to trade pressures, governments do not lower regulatory stringency by rewriting (de jure) environmental regulations for any level of domestic constraints. In contrast, when political constraints are low, governments respond to trade pressures by adjusting regulatory stringency via de facto changes. Moreover, in the context of de facto policy changes, the constraining effect of veto players is more pronounced for air pollution (sulphur dioxide) in comparison to water pollution (biochemical oxygen demand). This is because air pollution is a more visible pollution issue around which organized, urban constituencies tend to mobilize.

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... To keep the analysis manageable, we examine these issues in relation to one source of competitive pressures, export competition, but our arguments can in principle be extended to other sources, notably competition for inward foreign direct investment (FDI) and for domestic market shares. Furthermore, the RTB hypothesis is not limited to labor standards but has been studied also in relation to environmental standards Prakash 2010 , 2012 ), and the methodological choices we discuss are also relevant to scholars working on those areas. ...
... On the other hand, disaggregated trade data suffer from well-known problems (Feenstra et al. 2005). In particular, there are inconsistencies between reported exports and imports, and there are a large number of missing and incomplete values, especially in developing countries ( Cao and Prakash 2010 ). 1 In the analysis that follows, we strike a balance between specificity and data quality by using the second level of the SITC, in line with other studies that measured degrees of trade competition ( Baccini and Koenig-Archibugi 2014 ). ...
... 5 In line with most previous research, we include the lagged dependent variable (LDV) ( LC i , t − 1 ) to account for dynamic changes in labor standards and for the autocorrelation of the residuals ( Davies and Vadlamannati 2013 ;Olney 2013 ). There are strong reasons to believe that labor standards are persistent over time and that last year's 2 We follow Cao and Prakash (2010 ) and assign a value of 0 to dyads with negative correlations. This is equivalent to assuming that countries are not in competition if they trade dissimilar products (cor < 0). ...
Article
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The possibility that economic competition puts working and employment conditions under pressure is a frequently voiced concern in debates on international trade. We provide an empirical assessment of the argument that competition for world markets has generated a race to the bottom in labor standards. Spatial econometrics is used to identify interdependence in labor practices among trade competitors. We present a strategy for measuring export competition between countries that fulfills several criteria: It reflects actual competition between firms offering similar products, rather than export similarity in relation to a few very broad product categories; it captures not only what competitor countries export but also how much; it takes into account that states are exposed to export competition to different degrees; and it focuses on the downward pressure stemming from a deterioration of labor rights protections among close competitors. To address endogeneity, we implement a two-stage least-squares (2SLS) instrumental variable approach and a difference two-stage generalized method of moments (GMM) approach. We find no evidence that export competition has triggered a race to the bottom in two samples covering most states in the world over nearly three decades. The finding is robust to a variety of alternative specifications.
... Both de jure and de facto aspects are critical to understanding a country's willingness to tackle its environmental problems. For instance, when international trade pressures are high and political constraints are low, both developed and developing governments tend to respond by de facto changes and reducing the level of enforcement of existing environmental regulations (Cao and Prakash 2012). This is because environmental groups are more likely to oppose the re-writing of legislation to render it weaker (de jure policy changes) than notice reductions in enforcement. ...
... This is because environmental groups are more likely to oppose the re-writing of legislation to render it weaker (de jure policy changes) than notice reductions in enforcement. These may be translated in practice through changes in enforcement budgets, reform of the penalties, and non-compliance fines or the adoption of administrative policies, all affecting overall stringency and environmental-policy outcomes (Cao and Prakash 2012). ...
... Indicators Relating to Policy Formulation 1) The presence or applicability of particular environmental legislation captured through the use of dummies, counts or continuous variables (e.g. Greenstone and Hanna 2014*, Hering and Poncet 2014*, Greenstone et al. 2012, Alberini 2001, Berman & Bui 2001, Hascic et al. 2009, Cao & Prakash 2012, or through the use of qualitative descriptors of environmental legislative frameworks (e.g. Taylor et al. 2003, Popp 2006 2) Measures of international environmental cooperation, such as counts or dummies for membership of multilateral environmental agreements (e.g. ...
Article
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Significant advances have been made in measuring the stringency of environmental policies, and understanding the relationship between environmental action and economic dynamics, particularly in high-income countries. Despite this, unequivocal empirical evidence on the impact of environmental policies on economic performance remains elusive, with conclusions being highly dependent on the conceptual and methodological choices with respect to defining and measuring the stringency of environmental policies. Most importantly, the literature evaluating these issues in developing countries remains sparse and robust findings are even more difficult to extract. This study reviews the existing body of work in both developed, and, where available, developing countries. It provides a comprehensive assessment of how environmental policy stringency has been measured, outlining definitional and conceptual challenges. It discusses the advantages and disadvantages of different indicators, and their usefulness for application in developing countries. In an effort to improve our understanding of the impact of environmental policy stringency in middle- and low-income countries, the study draws lessons for the prioritization of future data collection and measurement efforts. Through the study, two types of stringency indicators emerge as requiring the most attention: de facto enforcement indicators and de jure explicit measures that capture the stringency of specific environmental laws, rules and regulations. While there is no “best” conceivable measure of the stringency of environmental policies, a multidimensional approach to quantifying stringency in developing countries, with a focus on explicit direct measures, is advocated. Data collection and indicator-improvement efforts need, though, to be updated periodically and supplemented by other proxies for environmental stringency.
... If pollutants have different physical visibility, ISO 14001 participants will focus more on reducing visible pollutants in relation to the less visible ones. Given the relatively high physical visibility of air pollution in relation to water pollution (Cao & Prakash, 2012;Dunlap, 1994), we hypothesize that ISO 14001 certified firms will strategically invest more resources to reduce air pollution in relation to water pollution. The observable implication is that all else equal, the effect of national level ISO adoption on reductions in aggregate levels of air pollution should be more pronounced in relation to reductions in water pollution. ...
... We expect pollutant's physical visibility to be an important factor in this regard. Some literature suggests that air pollution tends to be more visible than water pollution (Cao & Prakash, 2012). Air pollution is physically visible, with smoke plumes jutting out of smokestacks, while water pollution tends to be partially hidden, because citizens often do not observe water pipes discharging waste water into rivers and streams. ...
... Following recent literature showing that the de jure stringency of countries' environmental regulations is strongly correlated with the number of their environmental treaty commitments, we use treaty commitments as a proxy for the stringency of countries' environmental regulations (Neumayer, 2002). Cao and Prakash (2012) report that the number of treaty commitments is highly correlated (r = .88) with the de jure stringency of environmental regulations in 24 countries in 1970, 1980, 1990, and 2000, suggesting that treaty commitments are a strong proxy for the de jure stringency of domestic environmental regulations. ...
Article
Debates about the efficacy of private environmental regimes have been fueled by disparate research findings, such as when the same regime that has been effective in one setting is found to be ineffective in another. In this article, we show that the efficacy of ISO 14001, the most widely adopted voluntary environmental regime in the world, is conditioned by the stringency of countries’ domestic regulations. In doing so, we outline a model of strategic corporate environmentalism wherein firms strategically focus their International Organization for Standardization (ISO) certification to reduce emissions of visible air pollutants as opposed to less visible water pollutants. Our analyses of pollution levels for a panel of 159 countries (73 for water pollution) from 1991 to 2005 indicate that ISO 14001 certifications reduce air (SO2) emissions in countries with less stringent environmental regulations but have no effect on air emissions in countries with stringent environmental regulations. We also find that ISO membership levels are not associated with reductions in water pollution levels (Biochemical Oxygen Demand BOD), irrespective of stringency of domestic law. Our article suggests that the efficacy of global private environmental regimes is likely to be conditioned by the domestic regulatory context in which firms function
... A similar pattern is given for veto players and political constraints: while more checks and balances make "it difficult to implement far-reaching, but probably most effective climate change policies," systems characterized by more political constraints produce "politics of small steps that are supported by a broad political elite" (Stadelmann-Steffen 2011, 485;also Poloni-Staudinger 2008). Conversely, with more political constraints in place, it is equally difficult to implement anti-environmental policies that would lower environmental quality (Cao and Prakash 2012 Populist leadership, however, tends to undermine and erode both checks and balances and the principle of inclusiveness and compromise. Mainly driven by what Huber and Schimpf (2016, 4) call an "anything goes mentality" (Hawkins 2003;Hawkins and Kaltwasser 2018;Mudde 2004; see also Canovan 1981;Huber and Schimpf 2016), populist leaders capitalize on the power they received from the popular sovereign and, once in office, seek to dismantle those institutions they perceive as dysfunctional-also because these institutions and processes are associated with the "corrupt elites" previously in power (Hawkins 2003). ...
... Spilker (2012) concentrates on the general network of environmental and nonenvironmental international organizations (IOs): according to her results, such IOs can be helpful, including by constraining leaders' power to pursue less environmentally friendly policies. Finally, Cao and Prakash (2012) study environmental performance with a view toward states' embeddedness in the global trade network. Those and related works suggest that populist leaders might also be constrained by the international level or that they, once in power, ignore or fail to implement international commitments. ...
Article
This article examines the impact of populism on environmental politics, focusing on countries’ outcome-level performance. I develop the argument that populist leadership likely undermines environmental quality. First, populist leaders tend to reject and refrain from implementing “green” policies, as these are usually promoted by “corrupt elites.” Second, populism erodes democratic institutions, thus offsetting a series of mechanisms that are related to better environmental outcomes. Empirically, I combine data from the Global Populism Database covering sixty-six countries and more than two hundred executive leaders with information on environmental performance at the outcome level. The findings suggest that populist leadership is strongly linked to lower environmental performance—also when controlling for a series of alternative influences and distinguishing between left- and right-wing populism. This research greatly adds to our understanding of the determinants of environmental policies, the role of regime type and ideology, and the literature on populism.
... Emulation theorists argue that copying from peers is often the low-cost approach to policy making, mimicking what may happen due to common sociocultural characteristics or geographic proximity [6,7]. Competition effects exist when nation-states adopt policies to lure global investment and keep exports attractive, especially when their competitors have done so [8]. The learning mechanism points to the role of new information and ideas, which lead to changes in policy makers' beliefs and create momentum for policy innovations [5]. ...
... The literature often points to competitive pressure from trade networks: governments respond to policy behaviors of their trade competitors by relaxing the enforcement of existing environmental regulations [8]. However, recent empirical analyses have generally failed to identify a significant impact of trade bloc partners on RE policy adoption [3,4]. ...
... Democratic freedoms ensure that diffuse interests such as climate protection are at least considered as part of the political process. It is presumably more difficult for the public to control climate change mitigation compared to the ratification of climate treaties (Cao & Prakash, 2012). Thus, we expect no effect of political rights on climate policy outcomes (Hypotheses 4b). ...
... While political rights contribute to commitment to climate cooperation, they are not associated with lower emission levels. An explanation for this finding is that it is, presumably, more difficult for the public to control the implementation of environmental policies (Cao & Prakash, 2012). The main implication of our results for the analysis of substantive research questions in empirical democracy research is that it could be fruitful to study the implications of democracy on a disaggregated basis to gain more analytical clarity and, therefore, to conceptualize and measure democracy quality dimensions separately. ...
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Previous empirical research on democracy and global warming has mainly questioned whether democracy contributes to climate protection. However, there is no consensus in the theoretical literature on what institutional traits of democracy are crucial for climate policy. Thus, results based on indices that summarize multiple democracy quality dimensions could be misleading, as their effects could balance each other out or hide the relative importance of each institutional trait. This article examines whether the analysis of the effects of democracy quality dimensions, measured by separate indicators, contributes to a better understanding of cross-national variance in climate policy compared to the focus on the regime type difference, measured by democracy quality measures. Compared to earlier research, the results indicate that the positive effect of democracy on commitment to climate cooperation depends on the realization of political rights. We find little to support the claim that democracy quality dimensions matter for climate policy outcomes. The main implication of our findings is that it could be fruitful to use more disaggregated democracy measures for the analysis of substantive research questions.
... Nos últimos anos, os especialistas em difusão de políticas começaram também a investigar como é que fatores institucionais, políticos ou económicos específicos de cada país medeiam a difusão e até que ponto os formuladores de políticas reagem às decisões de outros governos (Cao e Prakash, 2012;Neumayer e Plümper, 2012;Wasserfallen, 2014). É, ainda, de referir que a abordagem da difusão tem vindo a ser modificada e aplicada à análise comparativa entre Estados e reformulada no que toca à transferência de políticas. ...
Thesis
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This thesis analyses the institutionalization process of evaluation in the Portuguese development cooperation, between 1994 (the year in which the evaluation was integrated in the cooperation agency) and 2012 (the year in which IPAD merged with the Camões Institute). The key research question is: how the institutionalization of evaluation took place in the Portuguese development cooperation? To answer this question, a literature review and a desk analysis have been conducted. A survey and several semi-structured interviews with Portuguese cooperation actors have also been carried out. Based on the policy transfer theory, it starts from the hypothesis of an incomplete transfer, driven by external actors. Although there is a broad research on evaluation use, there is a research gap regarding the Portuguese reality. There is also no research based on policy transfer theory. This research seeks to contribute to fill these gaps, developing a model that identifies the factors that influence the institutionalization of evaluation in the Portuguese development cooperation. The results show that, despite the internal and, above all, the external determinants, the nature of the policy, the organizational/institutional context and the evaluation system adopted had an influence on the institutionalisation of the evaluation, in particular its use in the decision-making process. The results of this research are a contribution to the understanding of the institutionalization of evaluation in development cooperation organizations and a basis for future research. The conclusions can provide evidence to the cooperation professionals, guide the evaluation practice and promote its use in the decision-making process.
... Research shows that governments often take cues from their geographic or regional neighbors (Chandler, 2009;Liu & Yi, 2020;Motta, 2018;Rai, 2020) and some authors have suggested that geographic diffusion can capture a number of different causal mechanisms including competition, coercion, learning, and emulation (e.g., Shipan & Volden, 2008;Zhou et al., 2019). Geographic competition has been identified as an important driver of diffusion in numerous policy contexts (Baybeck et al., 2011;Berry & Berry, 1990;Cao & Prakash, 2012;Fay & Wenger, 2016;Woods, 2006). In the case of COVID-19, as with other health policy analyses (e.g., Boehmke, 2009), social distancing policy responses may engender economic competition between neighboring countries since social distancing is believed to be deleterious for economic performance. ...
Article
The COVID-19 crisis demanded rapid, widespread policy action. In response, nations turned to different forms of social distancing policies to reduce the spread of the virus. These policies were implemented globally, proving as contagious as the virus they are meant to prevent. Yet, variation in their implementation invites questions as to how and why countries adopt social distancing policies, and whether the causal mechanisms driving these policy adoptions are based on internal resources and problem conditions or other external factors such as conditions in other countries. We leverage daily changes in international social distancing policies to understand the impacts of problem characteristics, institutional and economic context, and peer effects on social distancing policy adoption. Using fixed-effects models on an international panel of daily data from 2020, we find that peer effects, particularly mimicry of geographic neighbors, political peers, and language agnates drive policy diffusion and shape countries' policy choices.
... Still, several recent studies, based on a political economy approach, postulate that the trade's effect on environmental regulation depends on the size of the relative shifts in the political power of industrial and environmental lobby groups, which is further determined by a country's comparative (dis)advantage in the polluting sector [12,13], the extent of substitution between foreign and domestic goods [14], the distribution of production factor ownership [15], who, producers or consumers, ultimately generates pollution [16], domestic political constraints, and the issue visibility of the pollutant [17], or quality and structure of political institutions [18,19]. It is thus not clear ex ante whether, and to what extent, trade would influence environmental regulation stringency. ...
Article
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The intensively debated issue of whether trade globalization leads to a race (climb) to the bottom (top) such that environmental policy stringency is loosened (strengthened) is still far from being uncontroversial. This paper provides new empirical evidence from the standpoint of the North (advanced) countries using both the generalized methods of moment (GMM) and GMM quantile estimators for dynamic panel data models. It first investigates the importance of trade partners and finds, in a sample of OECD countries, that increased trade with the South (developing) countries leads to more stringent environmental regulation whereas heightened trade with the North eases environmental regulation. It then examines whether there exist differences across regimes with different extents of stringency in environmental regulation and finds significant regime-specific effects. Specifically, liberalizing trade with the North weakens environmental regulation stringency in a regime with medium stringency but reinforces it in a regime with high and low stringency. Conversely, expanded trade with the South raises environmental regulation stringency in a regime with medium stringency but deteriorates it in a regime with high and low stringency.
... Increasing in economic activity are often associated with both greater stress on potable water supplies and higher levels of water pollution. Recent studies demonstrate, for example, that higher levels of trade in water-intensive or polluting sectors like manufacturing, textiles, and agriculture have a negative impact on access to potable water [18] and water pollution [22,23]. These effects have been shown to generate political pressure on national governments to improve access to potable water in countries with lower levels of inequality and those where people in the middle and lower classes are better able to organize politically [16]. ...
Article
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Global concerns about water security and water scarcity are motivating local governments, investors, and international financial institutions to prioritize investments in the water sector. Over the past thirty years, public–private partnerships (PPPs) have been popular mechanisms for encouraging private sector investment and helping local governments overcome economic, political, and technical challenges associated with large infrastructure projects in the water, electricity, and transportation sectors. We argue that the political economy factors that affect the prevalence of PPPs in the water sector—which must serve broad populations of people at low cost—are different than other types of infrastructure projects. We use the World Bank’s Private Participation in Infrastructure (PPI) database to explore factors that affect the likelihood that PPPs will be initiated in water relative to other sectors, and in water treatment relative to water utilities. We demonstrate that the likelihoods of PPPs in the water sector and water treatment are positively correlated with levels of output from industries that are water-intensive and pollution-intensive when the host country relies heavily on fossil fuels to generate electricity. Furthermore, when corruption levels are high, projects are more likely to be initiated in water than in other sectors, but those investments are more likely to be in water utilities than water treatment.
... Ces effets peuvent être captés par une variable mesurant la rigueur des réglementations environnementales (RE). Bien que des réglementations environnementales strictes ne soient pas toujours associées à des technologies plus propres, en particulier lorsqu'elles ne sont pas efficacement mises en oeuvre et/ou appliquées, de nombreuses enquêtes empiriques (par exemple,Eskeland et Harrison, 2003;Arimura, Hibiki et Johnstone, 2007;Cao et Prakash, 2012) montrent cette politique environnementale rigoureuse et bien conçue est -toutes choses égales par ailleurs -associée à un investissement accru dans la R&D environnementale accélérant l'innovation environnementale et réduisant ainsi les intensités de pollution. -Deuxièmement, un effet technique «autonome» peut réduire la pollution lorsque l'investissement dans les technologies environnementales se produit plus ou moins automatiquement en raison de facteurs externes, par exemple. ...
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... Given that the relatively lagged development of the environmental system, continuation of the reform of governance on environmental system is currently the priority for promoting the coordinated development of the three systems. However, the reform is hampered (Cao and Prakash 2012). Prior studies have attributed this problem to the performance appraisal system of local officials (Miao et al. 2015a). ...
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The rapid development of economic and urbanization systems exerts a negative impact on environmental system. To achieve the sustainable development of a country, it is important to obtain an in-depth understanding of the interaction among economic, urbanization and environmental systems. A coupling coordination model of the three systems is constructed in this research to investigate the interactions among the three systems in China. This study determines the contribution rate of each indicator to the three systems during the studied period, then evaluates the development levels of the three systems and finally explores coupling coordination levels among them. The results show that economic scale, spatial urbanization and environmental governance are the prominent indicator in the economic, urbanization and environmental systems, respectively. The findings suggest that the policy makers need to consider these indicators for the development of the three systems. Furthermore, the development level of economic, urbanization and environmental systems in China generally shows an upward trend, while the environmental system development has been lagging behind the development level of economic and urbanization systems. The spatial difference exists chronically, but such differences are gradually decreasing as time evolves. Among these systems, the reduction of difference in urbanization system is most obvious. Although the coupling coordination level of the three systems presents an upward trend, unbalanced development of these systems in regional level still exists. The insightful implications are discussed for coordinated development. Graphic abstract
...  The technique effect e is also function of the environmental policy stringency, , because regulation acts directly on firms' production technology used () and pollution-abatement efforts (a). Empirical investigations (e.g., Arimura, Hibiki and Johnstone, 2007;Cao and Prakash, 2012;Eskeland and Harrison, 2003) show that, all else equal, well-designed and stringent environmental policy is associated with increased environmental R&D, thus boosting environmental innovation and further lowering pollution intensities. ...
... In a similar way, ratification of environmental treaties may either proxy governments' concern for the environment or indicate the pressure to protect the environment placed on that government by international institutions; either force could lead to domestic pressure on the chemical sector to join RC (Cao and Prakash, 2012;Neumayer, 2002;Ehrlich, 2009). On the other hand, if treaty obligations comprise a substitute for RC membership, we may see the opposite effect. ...
Article
Environmental clubs have proliferated across sectors and issue areas. We examine the diffusion of the chemical industry’s Responsible Care® (RC) program. Much of the work on the diffusion of clubs has focused on the demand side: why firms join these clubs despite the costs of doing so. There is some work focusing on the supply side: why actors establish or create a new club. However, there is virtually no work examining why national-level industry associations decide to subscribe to an existing global environmental club in order to make it available to their members. Industry organizations in 17 lower and middle-income countries have joined RC, comprising 25 percent of RC members. We ask, in the context of developing countries, what motivates national associations to join RC? Drawing on an original dataset of RC global diffusion in 195 countries (1985–2017), we estimate a Cox proportional hazards model of the risk of joining RC. We find that RC adoption is more likely when a country exports chemicals to other countries that have joined RC (the California effect) and is unaffected by the total volume of its chemical trade. Thus, while exposure to global markets per se may not influence RC adoption, incentives change considerably when countries’ key importers signal their support for these environmental practices. This is because importing firms often realize that because they have joined Responsible Care, NGOs and stakeholders expect them to demand that their overseas suppliers adopt the same sort of environmental policies and work place safety practices. In addition, peer pressure and learning matter: RC adoption is more likely when countries in close physical vicinity (e.g., within 500 miles) have joined the club. Finally, domestic factors play a role as well: both the level of democracy and the size of the economy encourage national associations to join RC.
... Therefore, host states may attempt to "put on a good face" by keeping labor laws intact and boost their legitimacy for labor protections (Hafner-Burton and Tsutsui 2005;Peksen and Blanton 2017). It is generally difficult to pass legislation that reduces protections of important domestic constituencies (e.g., workers) because it is very likely to generate strong domestic opposition and international criticism (Cao and Prakash 2012;Blanton et al. 2015b). Furthermore, such explicit and noticeable adverse policy changes may mobilize opposition groups and backfire by promoting more labor grievances and unrest. ...
Article
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Do bilateral investment treaties (BITs) affect collective labor rights in developing countries? BITs lock in pre-existing low labor standards that are attractive to vertical foreign direct investment, which represents a potential source of labor grievances and protests. Since foreign investors are likely to challenge labor unrest under stringent BITs, host governments are forced to take measures to undermine workers’ ability to engage in collective action in order to reduce the risk of labor unrest. We argue that governments may choose to undercut collective labor practices rather than laws, resulting in a worsening of labor practices and a larger gap between labor laws and practices. Evidence from 119 developing countries between 1985 and 2012 supports our hypotheses. Our results are robust to various measures of BITs, the inclusion of additional control variables, and different model specifications.
... These effects may be captured by a variable measuring the stringency of environmental regulations (ER). Although stringent environmental regulations are not always associated to cleaner technologies, in particular when not efficiently implemented and/or enforced, numerous empirical investigations (e.g., Eskeland and Harrison 2003;Arimura et al. 2007;Cao and Prakash 2012) show that stringent, well-designed environmental policy is-all else equalassociated with an increased investment in environmental R&D accelerating environmental innovation and thus lowering pollution intensities. • Second, an 'autonomous' technique effect may reduce pollution when investment in environmental technologies occurs more or less automatically from external factors, e.g., technical progress, increased availability of more performing technologies (higher values for ) and eventually less expensive (lower price of abatement technologies should increase abatement effort, i.e., higher values for a ). ...
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Based on panel data covering 114 countries between 1996 and 2011, this study investigates the impact on pollution of trade in environmental goods (EGs). We check the validity of the implicit consequences assumed by the win–win scenario in the current trade-climate negotiations, arguing that market dynamics should guarantee that EGs’ liberalization is ‘automatically’ in the interest of all countries, regardless their market and institutional capacities. We show that trade in EGs alone fail to address environmental problems effectively. In particular, although we found efficiency gains from trade in EGs (in terms of CO2 and SO2 emissions per 1 US$ of GDP), and more recurrently for net exporters than for net importers, our results often failed to highlight environmental effectiveness (in terms of total CO2 and SO2 emissions). A general conclusion that emerges from our empirical results is that trade [in EGs] cannot effectively replace non-market-based solutions, when it comes to non-trade objectives. However, it seems to complement them efficiently. Our multiple-equation GMM estimations reveal specific direct, indirect and total effects on pollution depending on the countries’ net trade status, leading to several policy recommendations for an increased environmental effectiveness of trade in EGs.
... These effects may be captured by a variable measuring the stringency of environmental regulations (ER). Although stringent environmental regulations are not always associated to cleaner technologies, in particular when not efficiently implemented and/or enforced, numerous empirical investigations (e.g.,Eskeland and Harrison, 2003;Arimura, Hibiki and Johnstone, 2007;Cao and Prakash, 2012) show that stringent, well-designed environmental policy is -all else equal -associated with an increased investment in environmental R&D accelerating environmental innovation and thus lowering pollution intensities. Second, an 'autonomous' technique effect may reduce pollution when investment in environmental technologies occurs more or less automatically from external factors, e.g. ...
Article
Full-text available
Based on panel data covering 114 countries between 1996 and 2011, this study investigates the impact on pollution of trade in environmental goods (EGs). We check the validity of the implicit consequences assumed by the win-win scenario in the current trade-climate negotiations, arguing that market dynamics should guarantee that EGs' liberalization is 'automatically' in the interest of all countries, regardless their market and institutional capacities. We show that trade in EGs alone fail to address environmental problems effectively. In particular, although we found efficiency gains from trade in EGs (in terms of CO2 and SO2 emissions per 1 US$ of GDP), and more recurrently for net exporters than for net importers, our results often failed to highlight environmental effectiveness (in terms of total CO2 and SO2 emissions). A general conclusion that emerges from our empirical results is that trade [in EGs] cannot effectively replace non-market-based solutions, when it comes to non-trade objectives. However, it seems to complement them efficiently. Our multiple-equation GMM estimations reveal specific direct, indirect and total effects on pollution depending on the countries' net trade status, leading to several policy recommendations for an increased environmental effectiveness of trade in EGs.
... Other environmental policies can generate important social benefits, for example by improving air quality in cities or by diminishing the risk of property damage in the event of a natural disaster. Third, the domestic political economy of each issue area affects the propensity of governments to regulate it (Cao and Prakash 2012). A problem is malign if the preferences of influential actors diverge, but it is benign if these influential actors converge or are left indifferent (Underdal 2002: 15). ...
Article
While thousands of environment-related treaties have been concluded, it remains unclear whether they have been implemented. This paper investigates the relationship between the conclusion of treaties, namely international environmental agreements (IEAs) and preferential trade agreements (PTAs) that include environmental provisions, and the adoption of domestic environmental legislations. Thanks to datasets that are significantly more comprehensive and fine-grained than those previously used, we can focus on the direct link to environmental legislations rather than the less direct link to environmental outcomes. We are also able to study the relationship between international obligations on specific environmental issue areas and legislation in the same issue areas. As expected, we find a significant and positive relationship between both IEAs and PTAs with domestic legislation. Moreover, the link between treaties and domestic legislation is more pronounced in developing countries and, in these countries, more pronounced before rather than after entry into force. This relationship can be observed for many specific environmental issue areas, but not all of them. These findings contribute to the literature on environmental regime effectiveness and the domestic impact of treaties. 2
... The social, political, and economic complexities surrounding the development and implementation of effective wastewater treatment are immense; thus, financing improvements in wastewater infrastructure is a challenge everywhere. Typically, a large portion of water infrastructure is underground and out of sight; hence, elected officials interested in investing resources in prominent environmental problems may be reluctant to support water infrastructure improvements (Cao & Prakash, 2012). Large-scale wastewater management is very expensive, and the benefits derived from investment in improved treatment are often enjoyed by downstream communities and/or future generations, rather than by those investing resources to reduce pollution. ...
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Globally, freshwater resources are influenced by inputs of energy, nutrients, and pollutants from human wastewater. Local resource managers and policy-makers are tasked to address ecological and human-health concerns associated with aging and obsolete water infrastructure using limited financial resources. Nevertheless, there is limited information available describing how waste streams vary in their pollutant load or their subsequent effects on ecosystem structure and function in streams and rivers. Consequently, as wastewater systems degrade, local resource managers and policy makers are forced to develop watershed management strategies to deal with increasing effluent discharge without an understanding of how their decisions will influence local ecological processes or the structural and functional integrity of downstream habitats. Here, I discuss some of the ecological implications of obsolete or absent wastewater treatment, and describe how mismatches between the governance of wastewater management and watershed ecology may exacerbate environmental problems.
... Likewise, a control for veto players is included, following earlier work identifying veto players as a key domestic political institution mediating the effects of trade on environmental regulations (Cao & Prakash, 2012 Several of the other control variables are significant, with coefficients mostly in the expected direction. Other Trade is significant and positive in Models 1 and 2, suggesting that trade with China is not unique in its environmental impacts; however, it appears that the United States is not contributing to this effect, given the negative coefficient for Trade with USA. ...
Article
Over the past decade, China has become one of the largest trading partners to countries of Latin America and Sub‐Saharan Africa. A major concern is environmental degradation: much of this trade is composed of pollution‐intensive raw materials and Chinese traders do not promote the adoption of stringent environmental policies among trade partners, as the United States and the European Union do. The probable outcome for China's trade partners is a race to the bottom, whereby trade‐based competitive pressures lead governments to systematically weaken environmental regulations. However, this outcome may be moderated by good governance, as willing and able governments react to heightened pollution‐intensive trade with China by strengthening policies. This study considers whether sound governing institutions offset the harmful effects of trade with China on environmental policy outcomes, using a dataset covering 58 Latin American and Sub‐Saharan African countries over 10 years (2001–2010). Tests focus on the moderating effects of two facets of good governance: representativeness and bureaucratic capacity. The results demonstrate that trade with China does generate a race to the bottom in the environmental policies of partner countries. This effect is moderated by bureaucratic capacity, but not by representativeness.
...  The technique effect e is also function of the environmental policy stringency, , because regulation acts directly on firms' production technology used () and pollution-abatement efforts (a). Empirical investigations (e.g., Arimura, Hibiki and Johnstone, 2007;Cao and Prakash, 2012;Eskeland and Harrison, 2003) show that, all else equal, well-designed and stringent environmental policy is associated with increased environmental R&D, thus boosting environmental innovation and further lowering pollution intensities. ...
Article
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We investigate the causal effects of trade intensity in environmental goods (EGs) on air and water pollution by treating trade, environmental policy, and income as endogenous. We estimate a system of reduced-form, simultaneous equations on extensive data, from 1995 to 2003, for transition economies that include Central and Eastern Europe and the Commonwealth of Independent States. Our empirical results suggest that, although trade intensity in EGs (pooled list) reduces CO2 emissions mainly through an indirect income effect, it increases water pollution because the income-induced effect does not offset the direct harmful scale-composition effect. No significant effect is found for SO2 emissions with respect to the list of aggregated EGs. In addition to diverging effects across pollutants, we show that results are sensitive to EGs’ classification, e.g., cleaner technologies and products, end-of-pipe products, environmentally preferable products, etc. For instance, a double profit—environmental and economic—is found only for “cleaner technologies and products” in the models explaining emissions of greenhouse gases. Interesting findings are discussed for imports and exports of various classifications of EGs. Overall, we cannot support global and uniform trade liberalisation for EGs from a sustainable development perspective. Either regional or bilateral trade agreements that take into account the states’ priorities could act as building blocks towards a global, sequentially achieved liberalisation of EGs.
... These effects may be captured by a variable measuring the stringency of environmental regulations (ER). 14 Although stringent environmental regulations are not always associated to cleaner technologies, in particular when not efficiently implemented and/or enforced, numerous empirical investigations (e.g., Eskeland and Harrison, 2003;Arimura, Hibiki and Johnstone, 2007;Cao and Prakash, 2012) show that stringent, well-designed environmental policy is -all else equal - associated with an increased investment in environmental R&D accelerating environmental innovation and thus lowering pollution intensities. ...
Article
Full-text available
Based on panel data covering 114 countries in the world, this study investigates the direct, indirect and total effects of trade flows in environmental goods (EG) on total CO2 and SO2 emissions. Our system-GMM estimations reveal positive direct scale – [between-industry] composition effects prevailing on the negative direct technique – [within-industry] composition effects (if any), as well as compensating the significant indirect technique effects channelled by the stringency of environmental regulations and per capita income. If the net importers of EGs (namely from the APEC54 and WTO26 lists) are recurrently found to face increased pollution (in particular CO2 emissions) due to direct scale-composition effects of trade in EGs, the EGs’ net exporters are more likely to see their local pollution to decrease, in particular thanks to income-induced effects. We show that the direct, indirect and total effects of trade in EGs depend on the country’s net trade status, the EGs’ classification and the pollutant considered.
... The importance of political institutions in the EKC relationship has also been examined empirically in papers that consider political variables, in particular, political rights, civil liberties as well as bureaucratic quality, in addition to income in the EKC regression (e.g., Barrett & Graddy, 2000;Bättig & Bernauer, 2009;Bernauer & Koubi, 2009;Cao & Prakash, 2012;Congelton, 1992;Culas, 2007;Farzin & Bond, 2006;Harbaugh et al., 2002;Li & Reuveny, 2006Lin & Liscow, 2013;Maxwell & Reuveny, 2005;Panayotou, 1997;Torras & Boyce, 1998;Ward, 2008;You, Zhu, Yu, & Peng, 2015). Most of these studies report that more democratic political institutions tend to significantly increase both environmental standards and environmental quality. ...
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How does liberalization of trade and investment (i.e., economic globalization) as well as membership in international organizations (i.e., political globalization) affect the natural environment? Does economic and/or political globalization lead to ecological improvement or deterioration? This article reviews the existing literature on international political economy (IPE) and the environment in view of these and related questions. While globalization has various dimensions—economic, social, and political—IPE focuses mainly on the economic dimension when analyzing the effect of globalization on the environment. In particular, IPE puts most emphasis on the environmental implications of trade in goods and services as well as foreign direct investment (FDI). Even though both trade and investment are thought to have a substantial impact on the natural environment, the existing literature demonstrates that the effects of economic globalization on the environment are neither theoretically nor empirically one-dimensional. This means that existing research does not allow for a clear-cut overall assessment in terms of whether globalization leads to an improvement or deterioration of the environment. This is the case because the impact of economic globalization on the environment materializes via different mechanisms, some of which are supposedly good for the environment, and some of which are bad. On the one hand, economic globalization may improve environmental quality via its positive effect on economic growth, since trade and FDI facilitate specialization among countries according to their comparative advantage and the transfer of resources across countries. On the other hand, relevant economic theory gives little reason to believe that free trade and FDI will influence all countries in the same way. Instead, when considering the relationship between economic globalization and the environment, it is important to consider the interactions between scale, composition, and technique effects created by different national characteristics and trade and investment opportunities. In particular, the scale effect of openness to trade and capital mobility increases environmental degradation through more intensive production. The technique effect predicts a positive effect of trade and FDI on the environment through the use of cleaner techniques of production. And the change in the sectoral composition of a country as a consequence of trade and FDI, the composition effect, could positively or negatively affect the environment of a country (e.g., a change from agriculture to industry may lead to higher energy consumption and air pollution while a change from industry or agriculture to service is expected to decrease environmental degradation). Consequently, the overall effect of trade and FDI on environmental quality can be positive, negative, or nonexistent strongly depending on the specific situation of the country under investigation. Furthermore, both theory and empirical research highlight the potential for government policy and environmental regulations to affect the relationship between trade/FDI and the environment. On the one hand, increased competition between economic actors (usually companies) due to increased market openness (globalization) might cause a race to the bottom or at least regulatory chill in formal and informal environmental standards as well as pollution havens attracting foreign direct investment. The reason is that countries might weaken (or at least not increase) their environmental policies in order to protect industries from international competition or attract foreign firms and FDI motivated by the expectation of lower costs of environmental protection. Hence the (theoretical) expectation here is that developed countries will refrain from adopting more stringent environmental regulations and might even reduce existing standards due to competition with countries that have laxer environmental regulation. And less-developed countries will adopt lax environmental standards to attract FDI flowing into pollution-intensive sectors and export the respective goods to jurisdictions with higher environmental standards. In contrast, the Porter hypothesis states that a tightening of environmental regulations may stimulate technological innovation and thus help improve economic competitiveness. In addition, trade openness may induce an international ratcheting up of environmental standards (trading up) as higher environmental standards of richer and greener countries spread—via trade and investment relationships—to countries starting out with lower environmental standards. Furthermore, multinational corporations engaging in FDI and applying universal environmental standards throughout their operations tend to transfer greener technology and management practices to host countries, thus promoting the upgrade of local environmental standards and improving the environmental quality in those countries (the so-called pollution halo effect). Echoing the many theoretical pathways through which globalization can affect the natural environment, empirical studies estimating the impact of trade and FDI on environmental standards and environmental quality deliver quite heterogeneous results. In particular, the literature points to various factors mediating the effect of trade and FDI on the environment, such as differences in technology between industrial and developing countries, stringency of environmental regulations, property rights and political institutions, corruption levels as well as the pollution intensity of multinationals. More recently, IPE scholars have started to study the political dimensions of globalization and how they are related to environmental protection efforts. Memberships in international organizations are at the center of this research and recent studies analyze, for example, how they may affect the quality of the environment. Other studies focus more on specific organizations, such as the World Trade Organization, and, for instance, evaluate whether in trade disputes over environmental standards economic or environmental concerns prevail. Finally, a new strand of the IPE and environment literature deals with the micro level and studies how citizens evaluate economic openness in light of potential environmental concerns.
... These effects may be captured by a variable measuring the stringency of environmental regulations (ER). Although stringent environmental regulations are not always associated to cleaner technologies, in particular when not efficiently implemented and/or enforced, numerous empirical investigations (e.g., Eskeland and Harrison, 2003;Arimura, Hibiki and Johnstone, 2007;Cao and Prakash, 2012) show that stringent, well-designed environmental policy is -all else equal -associated with an increased investment in environmental R&D accelerating environmental innovation and thus lowering pollution intensities. ...
Working Paper
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Based on panel data covering 114 countries in the world, this study investigates the direct, indirect and total effects of trade flows in environmental goods (EG) on total CO2 and SO2 emissions. Our system-GMM estimations reveal positive direct scale – [between-industry] composition effects prevailing on the negative direct technique – [within-industry] composition effects (if any), as well as compensating the significant indirect technique effects channelled by the stringency of environmental regulations and per capita income. If the net importers of EGs (namely from the APEC54 and WTO26 lists) are recurrently found to face increased pollution (in particular CO2 emissions) due to direct scale-composition effects of trade in EGs, the EGs’ net exporters are more likely to see their local pollution to decrease, in particular thanks to income-induced effects. We show that the direct, indirect and total effects of trade in EGs depend on the country’s net trade status, the EGs’ classification and the pollutant considered.
... Thus, Li (2006) finds that countries with better rule of law, which tend to be democracies, offer lower levels of tax incentives. 30 Also, favorable trade policies are valued by investors who use developing countries as export platforms and Cao and Prakash (2012) find that countries with low political constraints, which tend to be non-democracies, respond to trade pressures with lower standards for air pollution. 31 ...
Article
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Does globalization just create welfare gains, or is it accompanied by lower accountability, reduced welfare provision, labor standards or human rights? We argue that the broad and legally enforceable protection offered to foreign investors by bilateral investment treaties (BITs) worsens the human rights practices of developing countries. In such countries, BITs lock-in initial conditions attractive to investors that tend to be linked to vertical investment flows and investment and trade competition, including tax incentives and low environmental standards or labor rights. BITs also constrain the provision of welfare benefits, basic infrastructure and investment in environmentally friendly technologies. The lock-in and constraining effects of BITs are sources of popular grievance and dissent in states that host foreign investment. BIT protected investor rights, however, limit the ability of governments to back-down vis-à-vis investors, lowering the relative cost of human rights violations. Finally, we argue that democracies have higher accountability and a lower threat perception for dissent, mitigating the negative effect of BITs. Evidence from 113 developing countries from 1981 to 2009 supports our hypotheses.
... We add to the emerging literature on PTA design, their implementation and non-trade effects (Rudra 2011, Kim 2012, Gray 2014, Morin et al. 2015, Jinnah and Morgera 2016, as well as the literature on the link between trade and the environment (Birdsall and Wheeler 1993, Copeland and Taylor 1995, Cole and Cole 2003, Levinson and Taylor 2008, Cao and Prakash 2012, Prakash and Potoski 2017. We further refine the mechanisms of the environmental race to the top through focusing on institutional factors (Vogel 1995). ...
Article
Can environmental provisions in preferential trade agreements (PTAs) foster an environmental race to the top? The ways in which different enforcement mechanisms in North–South PTAs affect the implementation of environmental standards in developing countries are examined. It is argued that environmental provisions in European Union (EU) and United States (US) PTAs will be effective in instigating policy change in partner countries, although the timing of the effect will vary significantly. Fines and sanctions in US PTAs incentivize partner countries to reform during the negotiation process. Reform in EU PTA partners is predicted to occur during agreement implementation as a result of the EU’s policy dialogue approach. Illustrative evidence is provided and the hypotheses are tested using statistical estimations of EU and US PTAs with environmental provisions on developing countries’ environmental policy reform.
... Reduced air pollution carries important health and economic benefits. In a democratic system, voters reward their government for the provision of these highly visible benefits (Cao and Prakash 2012). ...
Article
Demand for renewable energy is booming. Scholars often attribute this success to feed-in tariffs (FITs), which mandate that energy utilities pay a premium to renewable electricity producers and guarantee grid access for them. Why have so many countries, including least developed ones, adopted these policies? We hypothesize that democratic governments have political incentives to adopt the FIT because it improves environmental quality, promotes rural development, and distributes electricity generation profits from large utilities to independent producers. We analyze global data on FIT adoption, 1990-2012, and find that the association between democratic regime type and FIT adoption overwhelms all other covariates. The effect is specific to the FIT and does not exist for renewable portfolio standards or public competitive bidding for renewable energy contracts. Consistent with theories of distributive politics, among democracies, institutional malapportionment in favor of rural political constituencies favors FIT adoption.
... We also include GDP per capita, which has been used in other studies as an indicator of the capacity of the state for enforcement (Lim & Tsutsui 2012). While no data are available on the stringency of environmental regulations for all the countries in our model, in a robustness check an additional control is measuring the number of international environmental treaties signed or ratified by a country, as a proxy for de jure stringency (Cao & Prakash 2012). Inclusion of this additional control does not alter the substantive or statistical significance of our main findings. ...
... Although these studies give a clear indication on how successful different nations are in fighting environmental degradation, their use of outcome indicators does not allow for systematic insights into domestic policy portfoliostoo many intervening variables are at play. The same criticism applies to studies that use other proxies, such as the number of ratified international treaties (Cao and Prakash 2012). 4. Environmental pioneers are defined as first movers that set a regulatory trend. ...
Article
Scholars have proposed the analytical concept of the environmental state, a state where government actively addresses negative environmental externalities of economic activities. The mapping of environmental regulatory expansion in Western countries has been central in recent attempts to identify the environmental state empirically. Surprisingly little is known, however, when it comes to the environmental regulatory expansions in non-Western countries. Are there similar trends towards the emergence of environmental states in the non-West as well? From analysing data covering 25 policies in 37 countries, it appears that regulatory expansion has also occurred in the non-Western world, and the distinction between the West and the non-West has been reduced over time. There are non-Western countries among environmental pioneers, and there is some evidence for the trend of global convergence. Future research on environmental states should take into account emerging environmental states in the non-West.
... For instance, Arimura et al. (2007) show empirically that well-designed environmental policy stimulate investment in environmental R&D and thus can induce environmental innovation. Seemingly, Cao and Prakash (2012) suggest that stringent and enforced regulations are, all else equal, associated with low pollution intensities. ...
Article
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This paper seeks to investigate the impact of foreign direct investments (FDIs) on industrial pollution (CO2,SO2,NOx and BOD emissions) on a large sample of highly heterogeneous countries. By using panel data on manufacturing FDIs from France, Germany, Sweden, and the United Kingdom between 1995 and 2008, and by developing an empirical model with “first” and “second order” interaction terms, we investigate the existence and the conditionality of the most controversial FDI-induced effects on industrial emissions, i.e., Pollution Haven, Factor Endowments and Pollution Halo hypotheses. The paper has three main findings: (1) the central hypotheses linking pollution to FDI are found to act simultaneously, with opposing effects; (2) FDIs are associated with pollution reduction, i.e., predominating pollution halo induced effect, in countries with low to average capital-to-labour ratio but not too lax environmental regulation; (3) FDIs are found to increase pollution, i.e., prevailing pollution haven and/or factor endowments induced effects, in countries with average capital endowments and lax environmental regulations, as well as in all the capital abundant countries, though with a smaller magnitude in countries having strict environmental regulations and/or a high-skilled labour force. Some specific and interesting findings are discussed regarding different FDI-origin countries and FDI-host country groups.
Chapter
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Der Beitrag widmet sich zwei überaus fruchtbaren theoretischen Ansätzen in der Policy-Forschung und darüber hinaus: der Vetospielertheorie und Vetopunkt-Ansätzen. Neben den Grundzügen beider Ansätze stellen wir grundlegende Entwicklungslinien und Probleme dieser Literaturen anhand beispielhafter Studien dar. Es zeigt sich, dass beide Ansätze teils kontroverse Annahmen treffen, zu denen es plausible Alternativen gibt. Zum Beispiel kann das Verhalten von Koalitionsparteien im Policy-Prozess anders als von der Vetospielertheorie angenommen modelliert werden. Die kausalen Effekte bestimmter Institutionen oder Vetopunkte können zudem je nach Kontext variieren. Diesem Kontext sollte größere Beachtung geschenkt werden.
Chapter
In diesem Beitrag untersuchen wir den Zusammenhang zwischen staatlicher Regulierung im Umweltschutz und der Umweltperformanz. Ausgehend von drei theoretischen Perspektiven, welche die Beziehung von Staat und Markt beim Umweltschutz unterschiedlich konzeptualisieren, identifizieren wir fünf Pfade, wie staatlicher Eingriff und Umweltperformanz miteinander verknüpft sein könnten. Wir untersuchen dann die empirische Relevanz dieser Pfade mit einer quantitativen Analyse, die 29 umweltpolitische Maßnahmen in für 37 Länder und den Zeitraum von 1970 bis 2010 umfasst. Dabei finden wir zumindest für einige Politikbereiche und einige Länder Hinweise, die auf eine Effektivität nationalstaatlicher Regulierung hinweisen. Zukünftige Forschung kann auf unserem Rahmen aufbauen, um weitere Hypothesen zum Policy-Outcome-Nexus zu generieren und zu testen.
Article
Does it pay to be “greener” as a local official in China? In this paper, we examine the effect of local environment regulation outcomes, i.e., local pollution, on leaders' chances of promotion. This is an important question because only when the Chinese cadre evaluation system rewards local officials’ green behaviors, these officials would move away from their past priority in promoting economic growth at all costs, so that the environmental crisis in China might be addressed. We collect party secretary data for Chinese counties between 2001 and 2014 to measure promotion patterns. We construct county-year SO2 and PM2.5 pollution measures using NASA satellite data. We adopt an instrumental variable approach to deal with potential endogeneity issues of the pollution variables: for both PM 2.5 and SO2, we use ventilation coefficient, i.e., the product of wind speed and mixing layer height, as the instrument. Our empirical analysis shows that for county party secretaries, those who are able to reduce air pollution are more likely to be promoted. We find similar results for county magistrates. However, we do not find evidence for this pollution-promotion link for prefecture and provincial party secretaries.
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This chapter tests the impact of institutional quality on environmental performance in two ways: (i) it uses multidimensional (composite) indicators of environmental performance capturing effects on human health (EH) and on nature’s ecosystem vitality (EV) as against unidimensional indicators; and (ii) it attempts to relate performance to exogenous factors such as economic diversification and growth goals. We find that the institutional framework in small island developing states (SIDS) seems more geared towards protection of EH while neglecting widespread harm to EV. Moreover, EH performance in SIDS does not generally conflict with economic growth objectives or with industrial and tourism expansion. In non-SIDS, however, pronounced trade-offs between EH targets and industry as well as agriculture would imply lobbying activities, rendering regulatory institutions less effective. What emerges significantly is the critical status of EV in SIDS, which can be attributed to over-reliance on tourism as the driver of economic growth and proactive domestic and foreign tourism lobbies.
Article
Leftist governments tend to tax corporations heavily. However, they are unable to do so all the time. In this study, I posit that whether leftist governments can enact this preferred tax policy is conditional on the policy environment. When leftist governments are pressured by their economic competitors to reduce labor rights protection, instead of giving in, they choose to cut corporate tax rates, because the former is more politically harmful than the latter, and the latter is equally effective in achieving the policy goal the former is intended to accomplish. Using novel global data on labor rights from 1994 to 2012 and the structural equivalence technique to capture the policy pressure to restrict labor rights, I find robust evidence for the argument. This finding suggests that facing globalized economic competition, leftist governments make strategic compromise by adopting market-oriented policies in issue areas that deviate from their desirable ideological positions but are less costly than simply yielding to the pressure to alter policies in those issue areas that directly hurt their core constituencies.
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This chapter explains the motivation for this study of the effects of specific features of democracy on environmental performance. It formulates hypotheses and explains the research design of the subsequent empirical analyses. It cannot be expected that democracies are generally more environmentally friendly than autocracies. Instead, specific institutional traits of democracies contribute to environmental protection, while others presumably have no or, under certain conditions, even negative consequences for the environment. Social equality should contribute to environmental performance in democracies, as broad representation makes it more likely that diffuse interests are considered in the political decision-making process. Stronger local and regional democracy should contribute to environmental performance in democracies and autocracies, as it supports political participation, local acceptance of environmental policies and the efficiency of environmental protection.
Article
It is argued that loss and degradation of natural ecosystems reduce the opportunity to experience nature, and as a consequence, reduce concern for nature and support for nature conservation. This phenomenon is termed the ‘extinction of experience’. Research suggests a potential association between some nature experiences and conservation support. However, the influence of more typical urban nature experiences on conservation support—such as visiting urban parks—is not well understood. We used a longitudinal, representative dataset of adults in Brisbane, Australia (N = 6181) and examined the effects of nature experiences on conservation support using data from the same individuals surveyed at two time periods (2009 and 2011). Frequency of park use for physical activity with others was associated with conservation support, but no effects were observed for proximity to parkland or area of parkland adjacent to home. Frequency of physical activity on beaches and proximity to waterways were both associated with stronger conservation support, but coastal proximity was associated with lower conservation support. Mediation analysis examined how these experiences elicited support. The influence of park use on conservation support was mediated by all three tested pathways: environmental concern (as theorized by the extinction of experience), and two novel pathways, wellbeing, and social interactions. Neither beach use nor proximity to waterways elicited their effects via environmental concern; the effect of beach use was mediated by wellbeing and social interactions, whereas the effect of waterway proximity was mediated by wellbeing only. To assess whether observed effects were specific to nature, we examined the influence of two contrasting experiences on conservation support: both frequency of exercise classes and weights training elicited conservation support. Although certain urban nature experiences may elicit conservation support, results suggest that a variety of life experiences influence an individual’s capacity to support environmental initiatives. Rather than diminishing the role of nature, we argue these findings identify diverse entry points for broadening community support for nature conservation.
Article
Sustainable management of coastal ecosystems requires engaged communities—communities that support sustainable management policies and are willing to adopt behaviours that promote waterway health. Information provision is a common component of engagement practices, yet little is known about what type of information will most effectively motivate engaged communities. We conducted an experimental study (N = 702) examining the effectiveness of different messages about benefits of sustainable coastal management. We examined two messages about cultural ecosystem services (economic benefits and lifestyle benefits), messages focused on conservation benefits, and a ‘control’ message, which mentioned threats to coastal ecosystems but no benefits of management. We also compared the effect of factual and moral arguments on engagement outcomes. Overall, economic messages generated lower intentions to adopt household behaviours, and reduced information seeking across the whole sample. Moral arguments were not more effective than messages using factual arguments. In fact, factual arguments were associated with greater policy support and behavioural intentions. We also examined the role of participant values, political orientation and knowledge on message effectiveness. Participants with a conservative political orientation exhibited poorer responses to framed messages, compared with the control message. These findings highlight the importance of considering message content when communicating with communities. Specifically, messages about ecosystem services may not be superior to environmental messages when communicating about local issues. Recommendations for effective communication commonly suggest aligning messages with audience values. While our findings do not contradict this, they do serve as a reminder to avoid simple assumptions about what these values may entail, and that groups less supportive of conservation goals are likely to require more specific strategies to enhance communication effectiveness.
Article
This article argues that the broad and legally enforceable protection that bilateral investment treaties (BITs) offer to foreign investors worsens the human rights practices of developing countries. BITs lock in initial conditions attractive to investors that are linked to vertical investment flows and investment and trade competition. They also constrain the provision of welfare benefits or basic infrastructure. The lock-in and constraining effects are sources of popular grievance and dissent in states that host foreign investment. BIT-protected investor rights, however, limit the ability of governments to back-down vis-à-vis investors, lowering the relative cost of human rights violations. Finally, this study suggests that democratic regimes mitigate the negative effect of BITs. Evidence from 113 developing countries from 1981 to 2009 supports the hypotheses.
Article
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This paper explains variations in education spending among non-democracies, focusing on policy interdependence by trade competition. Facing pressures from spending changes in competitor countries, rulers calculate the costs and benefits associated with increased education spending: education increases labor productivity; it also increases civil engagement and chances of democratization. Therefore, we expect that rulers in countries whose revenues depend less on a productive labor force and those with shorter time horizons are less likely to invest because of lower expected benefits; rulers with single-party regimes, authoritarian legislatures, and especially partisan authoritarian legislatures are more likely to invest because such institutions enable them to better survive the threats associated with increased human capital. We find empirical support for policy interdependence and the conditional effects of government revenue source, time horizon, and partisan legislatures.
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The vast and growing policy diffusion literature analyzes how policy-making in one jurisdiction—be it a country or a subnational unit—is influenced by prior policy decisions in other jurisdictions. Rather surprisingly, Europe remains an understudied area in the recent policy diffusion literature. This comes as a surprise because the European governance structure provides an ideal setting for applying the theories and methods of diffusion, given that policy-making in Europe is embedded in a vertically and horizontally integrated network of jurisdictions. This chapter explores the overlaps and distinctions between the scholarships on policy diffusion and European public policy and discusses how the advances of the more recent policy diffusion literature could stimulate further European public policy research. Particularly, the approach of diffusion scholars to study the mechanisms of interdependent policy-making with data on the connectedness between jurisdictions has great potential for improving our understanding of European public policy-making.
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The EU has spearheaded the signing of preferential trade agreements (PTAs) with multiple countries across the developing world. These agreements play an important role in the toolkit of EU external environmental governance instruments by including environmental standards requiring trading partners to maintain proper levels of environmental protection. This chapter offers a much needed assessment of the effectiveness of environmental standards in EU PTAs. It traces the evolution of the EU’s approach towards environmental provisions, focusing on their governance mechanisms, and further examines their implementation in EU PTA partners, assessing the governments’ and civil society’s involvement in this process and pointing at the deficiencies of the EU’s approach, such as their limited scope and soft enforcement.
Article
The proper division of responsibility for environmental protection between national and state governments has long been the subject of fierce debate. During the 1970s the United States Congress decided to shift the most important environmental responsibilities from state governments to the federal government. The main reason for this decision was to prevent a ‘race to the bottom’ in that states competing for industries could otherwise be lax in implementing and enforcing federal environmental standards. Yet, some scholars have argued that there could just as easily be a ‘race to the top’ among states as they compete to attract people and businesses concerned with environmental protection. China, in turn, is plagued with severe air and water pollution and soil contamination, which is attributed largely to ineffective enforcement of its national environmental laws. This article investigates whether China’s experience confirms the race-to-the-bottom theory. It demonstrates that devolution of responsibility for environmental protection to lower levels of government tends to result in lax implementation and enforcement of national environmental laws, particularly where national governments also create strong incentives for economic growth. It concludes that China’s highly devolved system of environmental governance is consistent with this theory, even if it does not provide conclusive evidence of its correctness.
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Globalisierung ist ein Prozess der Staaten näher aneinander rückt. Die Ursachen dieses Prozesses liegen in technologischen Innovationen und politischen Maßnahmen, die eine Erleichterung des grenzüberschreitenden Austauschs zwischen den Ländern erlauben. Indem sich Länder durch Wettbewerb, Lernen, Nachahmung und zum Teil auch durch Zwang an anderen Ländern orientieren, kann es zu einer Angleichung von Politiken kommen oder auch zu politischen Prozessen, die die Politik in den einzelnen Länder durch internationales Regieren (global governance) bestimmen.
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Die internationale Diffusion von Politiken hat in den letzten Jahrzehnten eine erhöhte Aufmerksamkeit in der Politikwissenschaft erhalten. Allerdings wird dabei oftmals die konzeptionelle und methodologische Voraussetzung einer Diffusionsanalyse wenig beachtet. In diesem Beitrag wird insbesondere auf diese Aspekte eingegangen, indem dargestellt wird, dass eine Diffusionsanalyse die etablierte funktionale Analyse durch eine relationale ergänzt. Dieser analytische Zugang fordert dann auch einen Perspektivwechsel in der methodologischen Behandlung von Diffusion. In der quantitativen Analyse wurden anhand von spatial lag und dyadischen Regressionen neue Analysetechniken entwickelt und in der qualitative Forschung verschiebt sich der Fokus auf die Erfassung von relationalen Kausalpfaden. Konzeptionelle Orientierung der Analyse von Diffusion wird anhand von Kausalmechanismen gegeben, die auch in diesem Beitrag dargestellt werden. Schließlich weist der Aufsatz auf Defizite und die mögliche weitere Entwicklung der Diffusionsforschung hin.
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Welche Risiken sind sozial und welche privat? Wer hat Anspruch auf welche Leistungen? Ist ein umfassender Sozialstaat überhaupt noch finanzierbar? Und warum werden diese Fragen in verschiedenen Ländern so unterschiedlich beantwortet? Diese und ähnliche Fragen – durchwegs zentral für den gesellschaftlichen Zusammenhalt in kapitalistischen Demokratien – machen die Analyse von Sozialpolitik seit Jahrzehnten zu einem der sowohl theoretisch als auch methodisch dynamischsten und vielfältigsten Felder politikwissenschaftlicher Staatstätigkeitsforschung. Nach einer Übersicht über die komparative Entwicklung und schwierige Messung von Sozialstaaten liegt der Fokus dieses Beitrages auf einer kritischen Diskussion der wichtigsten Theoriedebatten über die Zeit: Parteien- und Machtressourcenzentrierte Ansätze und ihre Kritiken; konkurrierende Regime-Theorien; institutionenzentrierte Zugänge zur Erklärung von Sozialstaatsab- und umbau, sowie die Bedeutung von mehrdimensionalen Verteilungswirkungen in der Sozialpolitikanalyse. Der Beitrag schließt mit einer Diskussion dreier neuerer Debatten: zur Wichtigkeit von öffentlicher Meinung und individueller Präferenzen für die Sozialstaatsentwicklung; zur Interaktion von Sozialpolitik und Parteisystemwandel; und zur zunehmenden Relevanz von Sozialer Investitionspolitik. Da sich nicht nur die Theoriebildung und die methodischen Möglichkeiten schnell entwickeln, sondern vor allem auch das Untersuchungsobjekt der Sozialstaaten selbst vor stetig neuen Herausforderungen steht, geht von diesem Feld auf nicht absehbare Zeit ein großer politischer und wissenschaftlicher Bedarf an innovativer politikwissenschaftlicher Forschung aus.
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Transnational climate governance (TCG) creates networks between countries as governments and other organizations enter joint arrangements to further their interests. We argue that actors build TCG, rather than focusing on promoting change at the domestic level, when this is a more efficient way of using their limited resources than lobbying to increase the level of domestic regulation. Based on standard micro-economic theory, we show that actors will respond to higher existing levels of domestic regulation by participating more in TCG, because the existence of such domestic legislation frees up resources for them to use in other ways, including activities at the transnational level. We carry out an empirical test based on the strength of the network ties between countries formed by TCG. Results support our main hypothesis on the positive relationship between a country’s level of domestic policy output and its participation in TCGs, suggesting that national policies and TCGs are more complements than substitutes as instruments to address global climate change.
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Globalisierung ist ein Prozess der Staaten näher aneinander rückt. Die Ursachen dieses Prozesses liegen in technologischen Innovationen und politischen Maßnahmen, die eine Erleichterung des grenzüberschreitenden Austauschs zwischen den Ländern erlauben. Indem sich Länder durch Wettbewerb, Lernen, Nachahmung und zum Teil auch durch Zwang an anderen Ländern orientieren, kann es zu einer Angleichung von Politiken kommen oder auch zu politischen Prozessen, die die Politik in den einzelnen Länder durch internationales Regieren (global governance) bestimmen.
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Der Aufsatz führt in die vergleichende Umweltpolitik ein. Es wird gezeigt, wie Umweltprobleme mit der zunehmenden Industrialisierung moderner Gesellschaften akut wurden, und die Politik sowohl innenpolitisch als auch auf internationaler Ebene aktiv begann, diese einzudämmen. Die Politikwissenschaft reagierte darauf mit zum Teil neuen Ansätzen (Ökologische Modernisierung) oder nutzte Analysekonzepte aus bekannten Bereichen. Dabei wurden unter anderem innovative Ansätze entwickelt, die den politischen Prozess in vergleichender Perspektive betrachten. Stärker als in anderen Politikbereichen, sind im Umweltbereich Rahmenbedingungen zu beachten, auf die in diesem Aufsatz ebenfalls eingegangen wird. Insgesamt zeigt sich, dass die politikwissenschaftliche Analyse von Umweltpolitik und -performanz zu einem der innovativsten Gebiete der vergleichenden Politikwissenschaft gehört.
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New Environmental Policy Instruments (NEPIs) are becoming increasingly attractive. From a global perspective, there has been a rapid diffusion of these market-based, voluntary or informational instruments. This article examines the spread of four different NEPIs – eco-labels, energy or carbon taxes, national environmental policy plans or strategies for sustainable development, and free-access-of-information (FAI) provisions. The adoption of NEPIs by national policy makers is not simply a reaction to newly emerging environmental problems or to real or perceived deficits of traditional command and control regulation, rather the use of NEPIs can also be ascribed to the inner dynamics of international processes of policy transfer or policy diffusion. These processes make it increasingly difficult for national policy makers to ignore new approaches in environmental policy that have already been put into practice in ‘forerunner’ countries.
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Applying the new economics of organization and relational theories of the firm to the problem of understanding cross‐national variation in the political economy, this volume elaborates a new understanding of the institutional differences that characterize the ‘varieties of capitalism’ found among the developed economies. Building on a distinction between ‘liberal market economies’ and ‘coordinated market economies’, it explores the impact of these variations on economic performance and many spheres of policy‐making, including macroeconomic policy, social policy, vocational training, legal decision‐making, and international economic negotiations. The volume examines the institutional complementarities across spheres of the political economy, including labour markets, markets for corporate finance, the system of skill formation, and inter‐firm collaboration on research and development that reinforce national equilibria and give rise to comparative institutional advantages, notably in the sphere of innovation where LMEs are better placed to sponsor radical innovation and CMEs to sponsor incremental innovation. By linking managerial strategy to national institutions, the volume builds a firm‐centred comparative political economy that can be used to assess the response of firms and governments to the pressures associated with globalization. Its new perspectives on the welfare state emphasize the role of business interests and of economic systems built on general or specific skills in the development of social policy. It explores the relationship between national legal systems, as well as systems of standards setting, and the political economy. The analysis has many implications for economic policy‐making, at national and international levels, in the global age.
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Political scientists, sociologists, and economists have all sought to analyze the spread of economic and political liberalism across countries in recent decades. This article documents this diffusion of liberal policies and politics and proposes four distinct theories to explain how the prior choices of some countries and international actors affect the subsequent behavior of others: coercion, competition, learning, and emulation. These theories are explored empirically in the symposium articles that follow. The goal of the symposium is to bring quite different and often isolated schools of thought into contact and communication with one another, and to define common metrics by which we can judge the utility of the contending approaches to diffusion across different policy domains.For helpful comments on an earlier draft of this article, the authors wish to thank Barry Eichengreen, Lisa Martin, and John Meyer. Nancy Brune and Alexander Noonan provided excellent research assistance. The authors also wish to acknowledge and thank the Yale Center for International and Area Studies, the UCLA International Institute, and the Weatherhead Center for International Affairs at Harvard University for funding conferences at which this collection of symposium papers were discussed.
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Economists have made a strong case for the relative efficiency of market-based mechanisms for environmental regulation such as cap and trade and “green taxes,” yet the spread of these forms has been limited, and traditional “command and control” regulation still predominates. The authors explain geographical and temporal variation in green tax burdens by considering their domestic and international determinants, modeling international influences using spatial lags. Hypotheses are tested using panel data on Organisation for Economic Co-operation and Development member states from 1995 to 2004. At the domestic level, the authors show that green tax burdens are influenced by the left–right and environmental positions of legislative medians and the power of the energy-producing sector, among other factors. The authors also show that ideas about policy diffuse through international networks generated by trade and environmental intergovernmental organizations, but they do not find compelling evidence for international tax competition.
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In the wake of the Soviet bloc’s collapse, various postcommunist countries rushed to gain greater access to foreign markets. Many of them have made substantial progress in liberalizing commerce, but the movement toward free trade has been by no means universal. One prominent view is that the establishment of democratic institutions has stimulated economic reform in thepostcommunist world. The authors conduct one of the first studies on this topic and find that democracies are indeed more likely to liberalize trade than nondemocracies. They also find that the electoral calendar has a potent influence on the timing of commercial reform in postcommunist democracies: Controlling for a range of factors, politicians are most likely to reduce trade barriers immediately after voters go to the polls. Trade liberalization is much less likely to occur at other points in a democracy’s electoral calendar, and elections have no effect on commercial reform in nondemocracies.
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This article tests the hypothesis that democracies exhibit stronger international environmental commitment than non-democracies, using multivariate econometric techniques. A number of proxy variables are used in lieu of environmental commitment, a non-observable variable. Strong evidence is found that democracies sign and ratify more multilateral environmental agreements, participate in more environmental intergovernmental organizations, comply better with reporting requirements under the Convention on International Trade in Endangered Species of Fauna and Flora, put a greater percentage of their land area under protections status, are more likely to have a National Council on Sustainable Development in their country and have more environmentally relevant information available than non-democracies. The findings suggest that a spread of democracy around the world will lead to enhanced environmental commitment worldwide. Results are robust with respect to inclusion or exclusion of developed countries in the sample. The use of four different variables for democracy also ensures robustness with respect to the measure of democracy. The strong evidence in favour of a positive link between democracy and environmental commitment stands in contrast to the somewhat weak evidence on such a link between democracy and environmental outcomes. The explanation presumably is that theory predicts a stronger positive link of democracy with environmental commitment than with environmental outcomes.
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This article investigates the nature of the linkages between trade and labor rights in developing countries. Specifically, we hypothesize that a “California effect” serves to transmit superior labor standards from importing to exporting countries, in a manner similar to the transmission of environmental standards. We maintain that, all else being equal, the labor standards of a given country are influenced not by its overall level of trade openness, but by the labor standards of its trading partners. We evaluate our hypothesis using a panel of 90 developing countries over the period 1986–2002, and we separately examine the extent to which the labor laws and the actual labor practices of the countries are influenced by those of their export destinations. We find that strong legal protections of collective labor rights in a country's export destinations are associated with more stringent labor laws in the exporting country. This California effect finding is, however, weaker in the context of labor rights practices, highlighting the importance of distinguishing between formal legislation and actual implementation of labor rights.
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This article examines the relationship between national political and economic institutions and environmental performance since the early 1970s in seventeen OECD countries. After presenting hypotheses about some of the effects of the most important structural and institutional variables on performance, I test these hypotheses using a multiple regression analysis. I find that neo-corporatist societies experience much better environmental outcomes than more pluralist systems. However, neither the degree of ‘consensual’ political democracy nor traditional political factors can explain much variation in environmental performance. These relationships hold even after controlling for other structural factors such as income and manufacturing intensity. The results are robust despite perennial small-n statistical problems encountered in comparative political economy.
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The article compares different political systems with respect to one property: their capacity to produce policy change. I define the basic concept of the article, the ‘veto player’: veto players are individual or collective actors whose agreement (by majority rule for collective actors) is required for a change of the status quo. Two categories of veto players are identified in the article: institutional and partisan. Institutional veto players (president, chambers) exist in presidential systems while partisan veto players (parties) exist at least in parliamentary systems. Westminster systems, dominant party systems and single-party minority governments have only one veto player, while coalitions in parliamentary systems, presidential or federal systems have multiple veto players. The potential for policy change decreases with the number of veto players, the lack of congruence (dissimilarity of policy positions among veto players) and the cohesion (similarity of policy positions among the constituent units of each veto player) of these players. The veto player framework produces results different from existing theories in comparative politics, but congruent with existing empirical studies. In addition, it permits comparisons across different political and party systems. Finally, the veto player framework enables predictions about government instability (in parliamentary systems) or regime instability (in presidential systems); these predictions are supported by available evidence.
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This paper analyses the rise of the new order of regulatory capitalism. It starts with an analytical and historical analysis of the relations between capitalism and regulation, and suggests that change in the governance of capitalist economy is best captured by reference to five dimensions: (a) a new division of labor between state and society (e.g., privatization); (b) an increase in delegation (redefining the boundaries between the experts and the politicians); (c) proliferation of new technologies of regulation; (d) formalization of inter- and intra-institutional relations and the proliferation of mechanisms of self-regulation in the shadow of the state; and (e) the growth in the influence of experts in general and of international networks of experts in particular. Regulation, though not necessarily directly by the state, seems to be the wave of the future and the current wave of regulatory reforms opens a new chapter in the relations between the state and the economy. It is therefore suggested that is the notion of regulatory capitalism (rather than of the regulatory state or the regulatory society) best captures the extent to which governance nowadays rests on rule making and rule enforcement in both the domestic and the international arenas.
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In a relatively small but growing body of literature in political science and environmental studies, scholars debate the effect of democracy on environmental degradation. Some theorists claim that democracy reduces environmental degradation. Others argue that democracy may not reduce environmental degradation or may even harm the environment. Empirical evidence thus far has been limited and conflicting. This article seeks to address the democracy–environment debate. We focus on the effect of political regime type on human activities that directly damage the environment. Our discussion of the theoretical literature identifies different causal mechanisms through which democracy could affect environmental degradation. The empirical analysis focuses on the net effect of these competing mechanisms. We examine statistically the effect of democracy on five aspects of human-induced environmental degradation—carbon dioxide emissions, nitrogen dioxide emissions, deforestation, land degradation, and organic pollution in water. We find that democracy reduces all five types of environmental degradation. While the substantive effect of democracy is considerable, it varies in size across different types of environmental degradation. We also find nonmonotonic effects of democracy that vary across the environmental indicators.
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The empirical evidence that links political institutions to economic outcomes has grown dramatically in recent years. However, virtually all of this analysis is undertaken using data from the past three decades. This paper extends this empirical framework by performing a two-century long historical analysis of the determinants of infrastructure investment in a panel of over 100 countries. The results demonstrate that political environments that limit the feasibility of policy change are an important determinant of investment in infrastructure.
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The authors examine the impact of globalization on state structures in the specific instance of the central bank. Following the world-system, world-society, and neoinstitutional perspectives in sociology, they assume that states are in cultural, political, and economic competition with each other, thereby seeking to maintain their position and status, frequently by adopting organizational forms or practices that make them isomorphic with their environment. The authors predict that countries boost the independence of their central bank from the political power as their exposure to foreign trade, investment, and multilateral lending increases. They also model the cross-national dynamic process of diffusion of central bank independence by examining the impact of cohesive and role-equivalent trade relationships between countries. They find support for their hypotheses with information on 71 countries between 1990 and 2000.
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The existence of an actor as a set of asymmetric relations to and from every actor in a network of relations is specified as the position of the actor in the network. Conditions of strong versus weak structural equivalence of actor positions in a network are defined. Network structure is characterized in terms of structurally nonequivalent, jointly occupied, network positions located in the observed network. The social distances of actors from network positions are specified as unobserved variables in structural equation models in order to extend the analysis of networks into the etiology and consequences of network structure.
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When a model for panel data includes lagged dependent explanatory variables, then the habitual estimation procedures are asymptotically valid only when the number of observations in the time dimension (T) gets large. Usually, however, such datasets have substantial sample size in the cross-section dimension (N), whereas T is often a single-digit number. Results on the asymptotic bias (N → ∞) in this situation have been published a decade ago, but, hence far, analytic small sample assessments of the actual bias have not been presented. Here we derive a formula for the bias of the Least-Squares Dummy Variable (LSDV) estimator which has a approximation error. In a simulation study this is found to be remarkably accurate. Due to the small variance of the LSDV estimator, which is usually much smaller than the variance of consistent (Generalized) Method of Moments estimators, a very efficient procedure results when we remove the bias from the LSDV estimator. The simulations contain results for a particular operational corrected LSDV estimation procedure which in many situations proves to be (much) more efficient than various instrumental variable type estimators.
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Explanations for the international spread of financial market liberalization have emphasized either “top-down” mechanisms (globalization, pressure from international organizations and the United States) or “bottom-up” mechanisms focusing on domestic coalitions (derived from configurations of economic interests). In contrast to these broadly structural approaches that deemphasize the choices of individuals, this article focuses on the micro-mechanisms of diffusion by emphasizing the incentives facing office-seeking leaders. It argues that politically insecure leaders are potent agents of diffusion because they are particularly likely to “learn” the lessons of financial market reformand emulate the liberalizing practices of others for two reasons. First, the hefty economic boom often associated with financial liberalization provides a tempting way to buttress their near-term grip on power. As they observe other nations in their region experiencing a boom, leaders fearful of losing office will jump on the liberalization bandwagon, accelerating regional reform cascades. Second, insecure governments may be particularly susceptible to pressure from international organizations: They have motivated biases to believe the efficiency claims of liberalizers and strong reasons to seek approval for their policies.
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We use panel data on ISO 9000 quality certification in 85 countries between 1993 and 1998 to better understand the cross-national diffusion of an organizational practice. Following neoinstitutional theory, we focus on the coercive, normative, and mimetic effects that result from the exposure of firms in a given country to a powerful source of critical resources, a common pool of relevant technical knowledge, and the experiences of firms located in other countries. We use social network theory to develop a systematic conceptual understanding of how firms located in different countries influence each other's rates of adoption as a result of cohesive and equivalent network relationships. Regression results provide support for our predictions that states and foreign multinationals are the key actors responsible for coercive isomorphism, cohesive trade relationships between countries generate coercive and normative effects, and role-equivalent trade relationships result in learning-based and competitive imitation.
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This article studies the diffusion of the main institutional feature of regulatory capitalism, namely, independent regulatory agencies. While only a few such authorities existed in Europe in the early 1980s, by the end of the twentieth century they had spread impressively across countries and sectors. The analysis finds that three classes of factors (bottom-up, top-down, and horizontal) explain this trend. First, the establishment of independent regulatory agencies was an attempt to improve credible commitment capacity when liberalizing and privatizing utilities and to alleviate the political uncertainty problem, namely, the risk to a government that its policies will be changed when it loses power. Second, Europeanization favored the creation of independent regulators. Third, individual decisions were interdependent, as governments were influenced by the decisions of others in an emulation process where the symbolic properties of independent regulators mattered more than the functions they performed.
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This article investigates hypotheses generated by the veto players' theory. The fundamental insight of I this theory is thar an increase in the number of veto players (for all practical purposes, in, parliamentary ssystems the number of parties in government) and their ideological distance from one another will reduce the ability of both government and parliament to produce significant laws. In addition, the number of significant laws increases with the duration of a government and with an increase in the ideological difference between current and previous government. These propositions are tested with legislative data (both laws and government decrees) on working time and working conditions identified in two legislative sources: the NATLEX computerized database in Geneva (produced by the International Labour organization) and Blanpain 's International Encyclopedia for Labour Law and Industrial Relations. The data cover fifteen West European countries for the period 1981-91. The evidence corroborates the proposed hypotheses.
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Geoffrey Garrett challenges the conventional wisdom about the domestic effects of the globalization of markets in the industrial democracies: the erosion of national autonomy and the demise of leftist alternatives to the free market. He demonstrates that globalization has strengthened the relationship between the political power of the left and organized labour and economic policies that reduce market-generated inequalities of risk and wealth. Moreover, macroeconomic outcomes in the era of global markets have been as good or better in strong left-labour regimes ('social democratic corporatism') as in other industrial countries. Pessimistic visions of the inexorable dominance of capital over labour or radical autarkic and nationalist backlashes against markets are significantly overstated. Electoral politics have not been dwarfed by market dynamics as social forces. Globalized markets have not rendered immutable the efficiency-equality trade-off.
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Though the inclusion of multiplicative terms in multiple regression equations is often prescribed as a method for assessing interaction in multivariate relationships, the technique has been criticized for yielding results that are hard to interpret, unreliable (as a result of multicollinearity between the multiplicative term and its constituent variables), and even meaningless. An interpretation of a multiple regression equation with a multiplicative term in conditional terms reveals all these criticisms to be unfounded. In fact, it is better analytic strategy to include a multiplicative term than to exclude one. Complicated as quantitative political analysis may seem to the uninitiated, one of the most telling criticisms made against it is that it often oversimplifies an exceedingly complicated political reality. The penchant for simplicity and generality of explanation is, of course, one of the driving forces of science, and unfortunately, it sometimes drives too far. But oversimplification sometimes also occurs because political researchers do not know about or hesitate to use techniques that would allow them to detect more complicated patterns of relationship in data. A prime example of this is the technique considered in the following pages: the inclusion of multiplicative terms in multiple regression equations. Perhaps the most common simplification in quantitative analysis is the assumption of additivity-the assumption that the effect of an independent variable on a dependent variable is always the same, regardless of the level of other variables. The familiar multiple regression equation
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Examines the role that institutions, defined as the humanly devised constraints that shape human interaction, play in economic performance and how those institutions change and how a model of dynamic institutions explains the differential performance of economies through time. Institutions are separate from organizations, which are assemblages of people directed to strategically operating within institutional constraints. Institutions affect the economy by influencing, together with technology, transaction and production costs. They do this by reducing uncertainty in human interaction, albeit not always efficiently. Entrepreneurs accomplish incremental changes in institutions by perceiving opportunities to do better through altering the institutional framework of political and economic organizations. Importantly, the ability to perceive these opportunities depends on both the completeness of information and the mental constructs used to process that information. Thus, institutions and entrepreneurs stand in a symbiotic relationship where each gives feedback to the other. Neoclassical economics suggests that inefficient institutions ought to be rapidly replaced. This symbiotic relationship helps explain why this theoretical consequence is often not observed: while this relationship allows growth, it also allows inefficient institutions to persist. The author identifies changes in relative prices and prevailing ideas as the source of institutional alterations. Transaction costs, however, may keep relative price changes from being fully exploited. Transaction costs are influenced by institutions and institutional development is accordingly path-dependent. (CAR)
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Globalization critics argue that international trade spurs a race to the bottom among national environmental standards. ISO 14001 is the most widely adopted voluntary environmental regulation which encourages firms to take environmental action beyond what domestic government regulations require. Drawing on a panel study of 108 countries over seven years, we investigate conditions under which trade linkages can encourage ISO 14001 adoption, thereby countering environmental races to the bottom. We find that trade linkages encourage ISO 14001 adoption if countries' major export markets have adopted this voluntary regulation.
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Growing evidence demonstrating clear threats to the sustainabilily of the ecosystems supporting human societies has given rise to a variety of sociological theories of human-environment interactions. These environmental impact theories fall into three general perspectives: human ecology, modernization, and political economy. These theories, however, have not been empirically tested in a common analytic framework. Here, a framework that relies on ecological principles is adopted and modified. Using a revised stochastic formulation of that framework and the most comprehensive measure of environmental impact to date-the ecological footprint-the factors driving the environmental impacts of societies are assessed. The overall findings support the claims of human ecologists, partially support the claims of political economists, and contradict the claims of modernization theorists. Basic material conditions, such as population, economic production, urbanization, and geographical factors all affect the environment and explain the vast majority of cross-national variation in environmental impact. Factors derived from neo-liberal modernization theory, such as political freedom, civil liberties, and state environmentalism have no effect on impacts. Taken together, these findings suggest societies cannot be sanguine about achieving sustainability via a continuation of current trends in economic growth and institutional change.
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introduction to social networks, interesting the centrality chapter.
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The governance of natural resources used by many individuals in common is an issue of increasing concern to policy analysts. Both state control and privatization of resources have been advocated, but neither the state nor the market have been uniformly successful in solving common pool resource problems. After critiquing the foundations of policy analysis as applied to natural resources, Elinor Ostrom here provides a unique body of empirical data to explore conditions under which common pool resource problems have been satisfactorily or unsatisfactorily solved. Dr Ostrom uses institutional analysis to explore different ways - both successful and unsuccessful - of governing the commons. In contrast to the proposition of the 'tragedy of the commons' argument, common pool problems sometimes are solved by voluntary organizations rather than by a coercive state. Among the cases considered are communal tenure in meadows and forests, irrigation communities and other water rights, and fisheries.
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What accounts for the waves of policy diffusion that increasingly sweep across regions of the world? Why do many diverse countries adopt similar changes? Focusing on the spread of Chilean-style pension privatization in Latin America, this article assesses the relative merit of four theoretical explanations that scholars of diffusion have proposed. As the principal mechanism driving innovations' spread, these approaches emphasize external pressures, emanating especially from international financial institutions; the quest for symbolic or normative legitimacy; rational learning and cost-benefit calculation; and cognitive heuristics, respectively. The article assesses which one of these frameworks can best account for the three distinctive features of diffusion, namely its wavelike temporal pattern; its geographical clustering; and the spread of similarity amid diversity. While several approaches contribute to understanding policy diffusion, the analysis suggests that the cognitive-psychological framework offers a particularly persuasive account of the spread of pension reform.
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Trade policy is an important topic in global public policy. It is recognized that trade is hampered when buyers have incomplete information about the offered products, a problem accentuated in the international markets by the physical and cultural distances between buyers and sellers. Buyers look for proxies to assess product quality, and exporters that can provide assurance about quality gain a competitive advantage. Our paper focuses on voluntary or private regulatory programs that have emerged as important instruments to correct policy failures. We examine how trade competition motivates firms to signal quality by joining ISO 9000, the most widely adopted voluntary quality certification program in the world. Methodologically, our study is novel because we observe trade competition at the bilateral and the sectoral levels. Structural equivalence, the measure of competition we introduce in this paper, captures competitive threats posed by actors that export similar products to the same overseas markets. We study ISO 9000 adoption levels from 1993 to 2002 for 134 countries, and separately for non-OECD countries and non-EU countries. Across a variety of specifications, we find that trade competition drives ISO adoption: The uptake of ISO 9000 is encouraged by ISO 9000 adoption by firms located in countries that are “structurally equivalent” trade competitors. Given that information problems about product quality are likely to be more salient for developing country exporters, we find that trade competition offers a stronger motivation for ISO 9000 adoption in non-OECD countries in relation to developed countries. © 2010 by the Association for Public Policy Analysis and Management.
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This article reports results from a network analysis of international trade from 1965 through 2000. It addresses the impact of changes associated with globalization and the "new international division of labor" (NIDL) on structural inequality in the world economy. To assess this impact, I ask three specific questions. (1) Do patterns of international trade conform to a core/periphery structure through time? (2) Does the structure exhibit inequality with regard to industrial sophistication? (3) Have globalization and the NIDL encouraged upward mobility for historically poor countries, or have they reproduced a stable set of structural positions? The findings support the view that the NIDL and globalization have benefited a few exceptional countries while at the same time producing structural inequality.
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Interdependence is ubiquitous, and often central, across comparative politics. In comparative political economy, for example, globalization and rising capital mobility imply tax competition that suggests the fiscal policies of one country must depend crucially upon those of other countries with which it competes for capital. This paper shows this theoretically and, more generally, how any situation involving externalities from one unit's actions on others' implies interdependence. Positive/negative externalities induce negative/positive interdependence, which spurs competitive-races/free-riding, with corresponding early/late-mover advantages, and so strategic rush-to-act/delay-and-inaction. We show next how to model such interdependent processes empirically, that not doing so risks severe omitted-variable biases that erroneously favor domestic and exogenous-external accounts over interdependence but that doing so naïvely risks simultaneity biases with the opposite substantive implications. Then we discuss how to estimate properly specified interdependence models with spatial lags by maximum likelihood and, finally, how to interpret and present the resulting estimated spatio-temporally dynamic effects, response paths, and long-run steady-states, with their associated standard errors. We illustrate all this by replicating a noteworthy earlier, non-spatial, study of capital-tax competition. Web appendices contain further technical details, literature survey, data, statistical-software code, and spreadsheet templates for conducting all estimation and calculation procedures.
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In recent years there has been a growing body of literature within political science and international studies that directly and indirectly uses, discusses and analyzes the processes involved in lesson-drawing, policy convergence, policy diffusion and policy transfer. While the terminology and focus often vary, all of these studies are concerned with a similar process in which knowledge about policies, administrative arrangements, institutions and ideas in one political setting (past or present) is used in the development of policies, administrative arrangements, institutions and ideas in another political setting.Given that this is a growing phenomenon, it is something that anyone studying public policy needs to consider. As such, this article is divided into four major sections. The first section briefly considers the extent of, and reasons for, the growth of policy transfer. The second section then outlines a framework for the analysis of transfer. From here a third section presents a continuum for distinguishing between different types of policy transfer. Finally, the last section addresses the relationship between policy transfer and policy “failure.”
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This article examines several of the key hypotheses suggested by the race to the bottom theory in environmental regulation. The research studies annual state-level enforcement of federal air, water, and hazardous waste pollution control regulation, covering the period from 1985 to 2000. Specifically, the study estimates a series of strategic interaction models to examine whether a state's environmental regulatory behavior is influenced by the regulatory behavior of the states with which it competes for economic investment. While there is clear evidence of strategic interaction in state environmental regulatory behavior, states do not respond in the asymmetric manner suggested by the race to the bottom theory.
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A theoretical model of emission reductions is specified that accounts for voluntary and non-voluntary behaviour regarding the adherence to the Helsinki and Sofia Protocols, which mandated emission reductions for sulphur (S) and nitrogen oxides (NOx), respectively. From this model, we derive an econometric specification for the demand for emission reductions that adjusts for the spatial dispersion of the pollutant. When tested for 25 European nations, the model performs well for sulphur cutbacks. Less satisfying results are obtained for NOx, because the model’s assumption of a unitary actor at the national level is less descriptive. Collective action considerations indicate that sulphur emissions are easier to control than those of NOx.
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Why do some countries protect minority shareholders from rent-seeking by corporate insiders while others do not? To the extent that there has been convergence toward shareholder-friendly laws, what factors have shaped that convergence? We explore this question by examining the worldwide diffusion of insider trading laws through a series of event history analyses. We argue that variation in the adoption and enforcement in insider trading laws can be best explained by the interaction of rising international competitive pressures to attract investment capital through investor-friendly laws and electoral laws that make governments more or less vulnerable to economic voting. We find that governments are more likely to adopt and enforce insider trading laws when they face reelection under electoral laws that make them relatively vulnerable to economic voting and when they face international competitive pressures. Moreover, we find that the impact of domestic political institutions declines in significance as international competitive pressures increase, and vice-versa.
Article
When and where is cross-national diffusion an important determinant of policy innovation? I posit that the characteristics of a policy innovation—whether it imposes high or low “sunk” costs on adopters—and country attributes such as wealth, mediate the importance of diffusion in domestic policy choices. Competing risks analysis of two structural pension reform models in 71 developing and industrialized countries supports these hypotheses. Peer diffusion weighs heavily in the adoption of the costly “funded” defined-contribution pension reform model, and does so principally among middle-income nations, while the less-costly “notional” defined-contribution pension reform is not governed by diffusion.
Article
An implicit assumption of most policy analysts and some academics is that globalization leads to a convergence of traditionally national policies governing environmental regulation, consumer health and safety, the regulation of labor, and the ability to tax capital. Some claim that globalization leads to a race to the bottom, where concerns about the regulatory standards are sacrificed on the altar of commerce. Others argue that the growth of transnational governance structures leads to a negotiated convergence of ample regulation. This essay reviews the arguments and evidence for how globalization affects the convergence of regulatory policies, in particular the setting of labor and environmental standards. It argues that the theories of policy convergence, which rely on structural factors to induce policy convergence, are largely unsupported by the empirical evidence. Theories that grant agents autonomous decisionmaking power perform better but remain underspecified. Ironically, the realist paradigm, which has generally denigrated the globalization phenomenon, could prove a fruitful source for theories of improved policy convergence.
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Stringent and very specific environmental regulations may spur behavioral responses by the regulated entities that can offset the intended pollution control goals. I empirically examine the effects of regulating underground storage tanks for petroleum products and hazardous substances, focusing on their possible substitution or complementarity with a less stringently regulated alternative, aboveground tanks. Longitudinal county-level tank data from Florida reveal that the relationship between underground and aboveground tanks changed, from one of complementarity to one of substitution, after the regulations were issued. Tank installations are affected by resident characteristics that enter in the firms calculus of the damages from leaks.
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Pollution control in one environmental medium may alter polluters' releases into other media. This paper examines cross-media responses to public policies that restrict toxic air emissions and that increase waste management costs. The EPA's 1987-90 Toxic Release Inventories are used to study the policies' effects on air emissions and waste generation of chlorinated solvents. The results suggest that constraints on air emissions reduce waste generation, perhaps because facilities rely less on these chemicals. Increases in hazardous waste management costs increase air emissions, however, suggesting that facilities substitute between releases into different environmental media.
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Voluntary programs in which manufacturing plants pledge to reduce their emissions beyond the legal requirement have been promoted as a low-cost way to achieve health and environmental protection. The EPA's Industrial Toxics program is evaluated using an author-assembled GIS-database of manufacturing plants in the 48 contiguous states, controlling for mandated reductions in ozone depleting chemicals and changes in reporting of emissions. I find that, controlling for participants’ self-selection into the program, relative to non-participants, participants do not reduce their health-indexed emissions of target chemicals in several key industries. Where reductions are detected in selected industries, participants’ increased off-site transfers to recyclers give reasons to question whether this program truly reduced emissions. Moreover, the program did not reduce emissions in less politically active communities.