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Trade Competition and Domestic Pollution: A Panel Study, 1980–2003

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Abstract

This research note examines whether trade competition abets regulatory races in the environmental area. To analyze trade competition, we develop a new measure, structural equivalence, which assesses competitive threats that a country faces from other countries whose firms export the same products to the same destination countries. Employing this new measure, we analyze air pollution intensity (sulfur dioxide or SO2) and water pollution intensity (biochemical oxygen demand or BOD) for a panel of 140 countries for the time period 1980 2003. We find that trade competition is a significant predictor of water pollution intensity among structurally equivalent countries. We then test separately whether trade competition abets upward and downward regulatory races. We find that in the case of water pollution, countries respond symmetrically to downward and upward races, that is, they follow their structurally equivalent competitor countries both when they ratchet down their regulations and when they ratchet up regulations. In the case of air pollution, however, countries are responsive to downward policy changes only in competitor countries.

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... Instead, they will provide environmental protection at a level that better coheres with their political needs. Given the weak endogenous domestic demand for environmental public goods in most developing countries, foreign aid would encourage their governments to either lower regulatory standards or simply not adequately enforce them (Cao and Prakash 2010). The level of environmental protection would decline from A 3 down to A 4 . ...
... The largest share of SO 2 emissions stem from stationary sources such as electricity generation, iron, and the steel industry, all reflecting the backbone of the industrialization process in developing countries. Second, because SO 2 emissions have high visibility, there is political awareness about its negative consequences among governments, the media, and various interest groups (Cao and Prakash 2010). Third, governments across the world seek to regulate SO 2. ...
Article
This paper explores how trade and foreign direct investment (FDI) condition the effect of foreign aid on environmental protection in aid-recipient countries. We suggest that (1) environmental protection should be viewed as a public good and (2) all else equal, resource flows from abroad (via aid, trade, and FDI) influence governments' incentives to provide public goods. (3) Because these resources shape governments' incentives differently , their interactive effects should be examined. We begin with the assumption that developing country governments seek some optimal level of environmental protection, a level conditioned by their factor-intensive growth phase. We hypothesize that at low levels of export receipts or FDI inflows from the developed world, foreign aid is associated with superior environmental protection. This is because foreign aid, as an environmentally neutral addition to revenue, allows recipient governments to partially relax the trade-off between economic growth and environmental protection. As levels of export receipts or FDI inflows from the developed world increase, however, the salutary effect of foreign aid will diminish and eventually be reversed. This is because foreign aid mitigates the recipient government's dependence on traders and investors in the developed world, and concom-itantly reduces their pro-environmental policy leverage. Our analysis of 88 aid recipients, for the period 1980–2005, lends support to our argument.
... First, by focusing on international environmental commitment levels, our research adds to the numerous studies on international environmental cooperation (Bernauer et al. 2010, Cao andWard 2017). Second, we contribute to the growing field of research concentrating on environmental politics in developing countries focusing on how trade and environmental commitment interact (Cao and Prakash 2010, Spilker 2012, Prakash and Potoski 2017, Brandi et al. 2019. Third and finally, our study speaks to those scholars of environmental politics analyzing voluntary environmental commitments (Khanna 2001, Prakash andPotoski 2006). ...
... Due to its focus on environmental commitment and performance in the global South, our paper serves as a bridge between several strands of the literature that have been rather unrelated. In particular, we combine the literature on non-trade clauses in PTAs (Lechner 2016, Bastiaens andPostnikov 2017) with the growing field of research concentrating on environmental politics in developing countries (Cao and Prakash 2010, Spilker 2012 Potoski 2017) as well as with scholars of environmental politics analyzing voluntary environmental commitments (Khanna 2001, Prakash andPotoski 2006). An implication of our findings is to provide some positive news for policymakers since they suggest that even without the North imposing environmental clauses on developing countries, the latter often intrinsically commit to environmental protection in their trade agreements. ...
Article
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Conventional wisdom suggests that preferential trade agreements (PTAs) contain environmental standards because the highly regulated North imposes these standards on the reluctant South. But what about the increasing occurrence of environmental standards in South-South trade agreements? Are they simply a product of a diffusion process from North-South PTAs? Or do environmental standards in South-South PTAs signal real commitment to both environmental regulation and performance? We test these two perspectives against each other by quantitatively examining original data on environmental provisions in 479 PTAs. Using performance-based indicators our results support the notion that if developing countries take on the obligation of committing to environmental. When relying on a measure on commitment levels in the Paris Agreement on Climate Change, the results rather point to the diffusion-based perspective. In contrast to the conventional wisdom, the study shows that environmental protection is not always extrinsically motivated by developed countries.
... Conversely, less-developed countries will adopt laxer environmental standards in order to attract multinational corporations and export pollution-intensive goods (Esty & Geradin, 1998 While various studies seek to provide empirical evidence on the nature and impact of these linkages, there is actually rather little evidence that countries lower their environmental standards in order to remain competitive (Grey & Brack, 2002;Wheeler, 2001). Recent exceptions are Cao and Prakash (2010) and Andonova, Mansfield, & Milner (2007). In particular, Cao and Prakash (2010) show that trade competition between countries that export similar products to the same countries results in both countries having higher air pollution, as measured by SO2 emissions. ...
... Recent exceptions are Cao and Prakash (2010) and Andonova, Mansfield, & Milner (2007). In particular, Cao and Prakash (2010) show that trade competition between countries that export similar products to the same countries results in both countries having higher air pollution, as measured by SO2 emissions. Similarly, Andonova and colleagues (2007) report that increasing trade openness in post-Communist countries is connected with laxer environmental regulation. ...
Chapter
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. 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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. 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... Studies have shown that countries adopt environmental policies to increase imports and exports of goods. Cao and Prakash (2010) find that countries ratchet up or down their environmental laws if their trade competitors have done so. Saikawa (2013) finds that high-income and upper-middle-income countries can yield higher exports if both exporter and the importer have the same automobile emission standards than when only the exporter has them, showing that it is beneficial for trading partners to have similar emissions standards. ...
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... Because the ill effects of air pollution are highly visible, there is often strong political pressure to address the problem. Environmental policies targeting motor vehicles are politically attractive in this regard, because vehicles and their emissions are highly visible and vehicles are also responsible for other problems, such as traffic congestion, noise, and accidents (Bernauer & Koubi 2009;Cao & Prakash 2010). ...
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... What effect does economic globalization have on major industrial accidents? Globalization has long been a subject of great contention as critics assert that it fosters a "race to the bottom" in which the competition for capital, as well as the imperative to lower costs across supply chains, is linked to the competitive lowering of labor and environmental standards (e.g., Cao and Prakash, 2010;Rudra, 2008). Industrial accidents are a particularly tragic result of fierce economic competition and subsequent disregard for work-related regulations. ...
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Industry-related accidents are tragically ubiquitous events, yet their underlying causes remain poorly understood. We focus on an important factor associated with the likelihood of industrial hazards: economic globalization. Specifically, we advance multiple hypotheses that suggest that global economic ties as well as the policies that are intended to facilitate these ties increase the likelihood of major industrial accidents as they induce poor governance and the violation of worker safety and regulations. We combine data on economic globalization with data on major industrial accidents, and examine the relationship between these variables across 137 countries for the period 1971–2012. We find a significant positive relationship between economic globalization and the probability of industrial accidents. Results further suggest that the impact of state policies encouraging globalization, such as the removal of barriers to trade and capital flows, is stronger than that of trade and investment flows themselves. Our results show that a contradiction may exist between the pursuit of integration into the global economy and a key labor right—the right to a safe workplace—and suggest that pro-globalization policies may exacerbate the governance challenges associated with accident prevention.
... There is a continuing debate on how engagement with the global economy influences domestic environmental policies. Some scholars find that trade engagement leads to stronger environmental policies (Cao and Prakash 2010), while others find the opposite effect (Andonova, Mansfield, and Milner 2007). Therefore, we control for export salience (exports/GDP) by using data from the World Development Indicators database. ...
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... The rationale behind this specification is twofold: First, in addition to the contemporaneous influence of peers' choices, the focal government's ECER policy prioritization could be affected by the behaviors of its reference group in the previous period. Second, this specification mitigates the simultaneity bias of spatial lagged models because y j, tÀ1 is closely related to y j, t but not directly correlated with e i, t (Cao and Prakash 2010;Shi and Xi 2018). Ordinary least squares regression is applied in this specification. ...
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... To adequately determine whether there is a race to the top in judicial independence, we perform further tests following the approaches in current literature (Cao and Prakash 2010). We split the competitors' policies into two groups. ...
Article
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... The results for the Central Asia countries verify Beck and Joshi (2015). On the other hand, urbanization variable is positive and statistically significant at 10% level only Fixed Effects model and it increases CO2 emissions in Central Asia and this result is in line with the Cao and Prakash (2010). However, analysis suggests that trade openness (tropen) variable is positive and statistically significant at 1% level. ...
Article
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... However, 13 Our empirical analysis finds that trade openness has no effect on education spending in authoritarian states; nor does it mediate the effect of the trade competition variable defined as the weighted average level of education spending in trade competitor countries. 14 Recent studies show that diffusion mechanisms are present in a variety of areas such as social welfare policies (Brooks 2005;Gilardi 2007;Cao 2010Cao , 2012b, economic liberalization (Way 2005;Simmons 2004;Elkins et al. 2006), financial regulations (Brooks and Marcus 2012), and environmental policies (Busch et al. 2005;Ward and Cao 2012;Cao andPrakash 2010, 2012a). 15 We focus on export competition in this study. ...
Article
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... Studies of environmental politics often use SO 2 Intensity (e.g., Lim, Menaldo, & Prakash, 2015) and it is an appropriate measure for this study for several reasons. First, such emissions are visible to the public and to governments, fostering high levels of awareness (Cao & Prakash, 2010). Second, governments of the world have made strong and longstanding efforts to regulate SO 2 , relative to other pollutants, such as carbon dioxide (CO 2 ) or nitrous oxide (N 2 O). ...
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 first group pertains to policy diffusion that takes place even without the enforcement or intervention of the third party. The mechanisms include competition (Berry & Berry, 1990;Berry & Baybeck, 2005;Cao & Prakash, 2010;Vogel, 1995), rational learning (Boehmke & Witmer, 2004;Meseguer, 2004Meseguer, , 2005Mooney, 2001;Simmons & Elkins, 2004;Volden, 2006), or just imitation (McNamara, 2002;Meyer, 1994;Meyer & Rowan, 1977;Meyer, Boli, & Thomas, 1994;Wilks & Bartle, 2002). ...
Article
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This research focuses on policy diffusion of performance management in authoritarian China. A three-stage theory of diffusion is proposed by conducting a process that traces divergence and convergence in the diffusion of performance management in China. When a superior government only has a policy goal, the inferior governments, competing for innovation, will develop divergent policy instruments. When the superior government’s policy goal and policy content seem clear, local governments, competing for loyalty or bandwagoning, adjust their diverged policy instruments to converged ones conforming to the superior’s policy content. Finally, when the superior government issues a systematic set of policy goals, content, and instruments, it may use coercive power to promote diffusion. In the process, when the contents of diffusion are different, the superior government applies different levels of coercive power, and the mechanisms, characteristics, and outcomes of diffusion also differ. This research claims that in authoritarian China, the superior government, as a third party in the process of policy diffusion, will play a more sophisticated role than is currently expected in the policy diffusion literature.
... Critics claimed that environmental regulations increased firms' costs and reduced their profits (although not always; see 14), and made them uncompetitive in global markets. Interest groups representing labor and capital blamed regulatory burden for the "industrial flight" and races to the bottom (15)(16)(17)(18). The political clamor for regulatory reform (19) opened the door for experiments with new policy approaches, including collaborative partnerships, market-based policies such as cap and trade, and mandatory information disclosure policies such as the Toxics Release Inventory (21)(22)(23)(24)(25). Alongside these policy approaches, there was an increased emphasis on voluntary corporate action via CE, an issue we discuss below. ...
Article
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... Environmental regulations may also allow firms to access foreign markets, enabling them to emphasize their contributions to society while safeguarding trade interests (Urpelainen 2010). These justifications for policy support have hardly been integrated in comparative studies of business preferences for environmental policy, which still largely focus on the immediate economic costs of policy adjustment (Murphy 2004;Cao and Prakash 2010). This is in part due to the simplifying, unidimensional benefit-cost assumption often made to distinguish companies that face more or less material burdens. ...
Article
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When do firms oppose international climate policy? Existing work often assumes that firms disapprove of climate regulation due to the immediate costs of compliance. We claim that if policy is implemented gradually, private preferences for climate policy vary as a function of its progressive stringency. That is, supportive views may rise in the initial phase of the policy, while opposing views may emerge as the policy becomes more stringent. We also argue that emissions of individual companies, as well as emissions levels in their respective sectors, influence corporate positions on these two dimensions. We test our argument with new corporate survey data on the European Union Emission Trading Scheme (EU ETS). We find that firms’ views on the performance of the EU ETS vary based on whether they concentrate on the policy’s current state or its future, more stringent development. Moreover, we find that individual firm and sectoral emissions correlate with support for the early-stage, more lenient version of the ETS, but that high-emission firms are more interested in disinvesting and relocating if the ETS becomes stricter. Our findings imply that both firm and sectoral organization can constrain environmental regulation, and that domestic compensation, especially at early stages, can have important effects on the continuity of climate policy.
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... The recent development in the policy network literature has opened the opportunities for testing policydiffusion theory with social-network analysis (Lubell et al. 2012), but little theoretical and empirical work has been done to formulate the pathways that networks channel diffusion, except for a small stream of literature on international trade and relations. These studies focused on the diffusion of public-sector downsizing across 26 countries of Organizations for Economic Cooperation and Development (Lee and Strang 2006), policy changes in capital taxation across nations (Cao 2010), the diffusion of pollution intensity across 140 countries (Cao and Prakash 2010), and the spread of domestic regime change (Zhukov and Stewart 2012). But, none of these comparative politics studies have captured the role of public managers and their networks in the diffusion of innovations. ...
... Environmentalists can promote CE if they find key trading stakeholders of a country by improving environmental laws and practices in these countries as they identify crucial points and treat them through political and economic pressure to bring changes in the law. Trade happens among several countries and only focusing on an individual country would not benefit much, instead targeting a group of countries together would prove better in dealing with the environmental issues (Cao & Prakash, 2010). ...
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... An increase in competition for foreign investment, however, can have a negative impact on mental health. Governments attempt to attract foreign investment by deliberately depressing wages and imposing the lowest labor and pollution standards (Cao and Prakash 2010;Olney 2013). Notably, inferior working conditions (Fiori et al. 2016;Lager and Bremberg 2009) and severe environmental problems, such as pollution and noise (Klompmaker et al. 2019;Wang and Yang 2016), are associated with an increased risk of poor mental health. ...
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... Transboundary pollution is found to result in meteorological, ecological and health damages Zhang et al., 2017;Ngo et al., 2018). To overcome transboundary externalities, international institutions are necessary to create disincentives for pollutive externalities (Sprinz, 1994;Mitchell, 1994;Cao, 2010), as net pollution exporters were substantially less likely to ratify than net receivers, suggesting the presence of strong free-riding incentives (Perrin, 2010). ...
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... However, there is no guarantee that proximity is strongly correlated with externalities. This becomes even clearer when we consider indirect externalities transmitted through economic competition (Elkins et al. 2006;Cao and Prakash 2010). Japan and Germany are in many respects close competitors though the countries are geographically very distant. ...
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... By looking at only one aspect-quantity or quality-research is not accurately encompassing the full effect that a reduction of potable water can have on the political will of the people. Previous studies have mainly focused on the issues of water quality, and the overall impact of pollutants on water resources (Cao and Prakash, 2010;Jorgenson, 2007). By focusing on issues of pollution impacts alone, they miss other important impacts, i.e. poorer citizens who are denied access to water even when it is clean, and their connection to wider government policy. ...
... Along these lines, environmental regulations may provide the credibility for firms to access foreign markets, therefore incentivizing the firms to focus on the wider goal of helping society rather than safeguarding their own favorite policy (Urpelainen, 2010). These justifications for policy support, however, have hardly been integrated in comparative studies of business preferences, which still prefer to focus on economic costs from material adjustment (Murphy, 2004;Cao & Prakash, 2010). This is in part due to the easy unidimensional assumption one has to make to distinguish companies that face more or less material burdens. ...
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Environmental policies are an important subject of international cooperation and a major source of debate in international politics. Political interest in this type of regulation is driven by the fact that environmental policies unequally affect the domestic actors that are in charge of compliance. Attention is usually paid to industrial lobbies, which are often assumed to oppose legislation because this increases their costs of production. However, some evidence suggests that industrial interests may vary across and within industries: while some firms oppose environmental regulations, others have embraced them.
... The results for the Central Asia countries verify Beck and Joshi (2015). On the other hand, urbanization variable is positive and statistically significant at 10% level only Fixed Effects model and it increases CO2 emissions in Central Asia and this result is in line with the Cao and Prakash (2010). However, analysis suggests that trade openness (tropen) variable is positive and statistically significant at 1% level. ...
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Though industrialized countries are usually the ones indicted when environmental pollution is discussed, over the few last years the rate of emissions in developing countries has increased by a startling amount. The fallout from this increase is evidenced by the struggle of cities like Beijing to improve their air quality. Yet there also exist developing countries such as Thailand that have managed to limit their emissions to more tolerable levels, raising the question: why are some developing countries more willing or able to take care of their environment than others? In this volume, Gabriele Spilker proposes two factors for the differences in developing countries' environmental performance: integration into the international system and domestic political institutions. Focusing on developing countries generally but also closely examining important global powers such as China and India, Spilker employs a rigorous quantitative analysis to demonstrate the importance of considering various aspects of the international system, in order to draw more comprehensive conclusions about how globalization affects environmental performance. She asserts that democratic political institutions can shield developing countries from the negative consequences of either trade or foreign direct investment. But at the same time, developing countries, by avoiding demanding commitments, are more likely to use environmental treaties as a cover than as a real plan of action. Adding a new dimension to the existing body of research on environmental quality and commitment, Spilker convincingly demonstrates how international and domestic political factors interact to shape developing countries' ability and willingness to care for their natural environment.
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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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This paper expands traditional predatory theory approaches to state fiscal capacity by adopting spatial analytical reasoning and methods. Although previous work in the predatory theory tradition has often incorporated interdependent external influences, such as war and trade, it has often done so in a way that maintains a theoretical and empirical autonomy of the state. Theoretically, we suggest four mechanisms (coercion, competition, learning, and emulation) that operate to channel information through interstate rivalry and territorial contiguity, trade networks, and the political space associated with regime type and intergovernmental organization membership. We test our predictions using a multi-parametric spatio-temporal autoregressive model with four spatial lags capturing the four mechanisms. Our empirical results provide support for the coercion and learning mechanisms.
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This article analyses the influence of the EU’s actions on labour standards in the Eastern neighbourhood. It conceptualizes the EU’s actions as potential delta convergence mechanisms and models these mechanisms through a spatial econometric approach, using spatial lags. It then analyses the impact of these mechanisms on target countries’ rate of alignment with the International Labour Organization’s standards using spatial two-stage least squares regression analysis. The results indicate that the EU influences labour standards in the observed countries through a combination of coercion and example-setting, but more so through the former than through the latter. The study finds that participation in the European Neighbourhood Policy does not influence countries’ labour standards, nor does being a Generalized System of Preferences beneficiary. The article concludes that the EU influences labour standards through the manipulation of target countries’ cost-benefit calculations.
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This article analyzes the relationships among trade, the economy, and environmental quality in China. First, in the context of these relationships, the Super-SBM model is used to calculate the environmental efficiencies of thirty Chinese provinces and cities to obtain the degrees of regional disparity. Second, China’s provincial panel data from 2003 and 2012 are used to establish an influential factor indicator system of environmental efficiency. A section-weighted fixed effect model then provides insights about influential factors such as spatial heterogeneity. Third, the article establishes a variable coefficient model to identify the relationships among the objects of the study and divides the Chinese regions into four types. The suggestions include enhancing environmental and business regulations to ensure equilibrium between trade, the environment, and local economies.
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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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This paper examines how varieties of autocracies cope with the downward international policy interdependence in labor rights. It argues that institutionalized autocracies are more resistant to this downward pressure. Workers are empowered to elicit more policy concessions in institutionalized autocracies with parties and legislatures than in non-institutionalized autocracies in which such institutions are absent. Parties and legislatures allow workers to organize and negotiate with states regarding their rights in a regularized and peaceful manner, thereby preventing complete collusion between states and firms. Heterogeneity in autocracies' responses to downward policy pressure is thus expected. Using a conditional spatial econometric technique, it analyzes a newly collected dataset on labor rights for the period 1994–2009 for all autocracies. The empirical results offer support to the proposed theory. The findings also show that this institutionalization only matters for labor rights laws but not for labor rights practices.
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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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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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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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A recent RIPE article by Jerry Cohen argues that current research on the political economy of money has stagnated because of its overemphasis on the scientific method and domestic variables. We argue that a wide array of scientifically oriented research on the IPE of money considers the system in many different ways. To help build a dialogue, we categorize each of these conceptions of ‘the system’ and give examples of their application from recent research on the IPE of money. Our hope is that this typology will help scholars of different approaches recognize the similarities and differences in their research, beyond simply whether the research is scientific or heterodox.
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In this study, I examine how domestic regimes mitigate pressure from economically competing states to reduce the protection of labor rights. I argue that democratic states provide higher protection and are more resistant to this downward policy pressure for two main reasons. Directly, democracy empowers workers through freedom of association and enfranchisement. Indirectly, democracy offers better protection of property rights, which lessens the need to use labor rights as an economic incentive. I also argue that this resistance to the downward pressure is more pronounced in practice than in law. These expectations are supported through spatial analyses of a new global dataset on association and collective-bargaining rights for the period 1994–2012. The results remain robust to alternative measures of labor rights, different model specifications, and various econometric estimators.
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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.
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en The link between geographical leadership mobility and policy isomorphism is rarely discussed in the extant literature. We argue that the geographical leadership mobility encourages local executives to converge their development experiences in their original working jurisdictions and their current positions. The distinct Chinese political personnel system provides an ideal environment that allows researchers to examine the isomorphic effects of geographical leadership mobility. This research builds a dataset of local social spending between 1998 and 2011 as well as a database of the leadership mobility history of provincial executives in China. Results of the spatial panel analysis (SPA) demonstrate that the geographical leadership mobility (i.e., horizontal, top‐down, and bottom‐up) of governors stimulates the regional isomorphism of provincial education and health care spending. The empirical findings affirm the effectiveness of the effort of the Chinese central government in narrowing the regional inequality of social welfare provision through the geographical mobility of local leadership. Abstract zh 现存文献很少讨论到领导层的地域间流动与政策同构之间的联系。我们认为,领导层的地域间流动可以鼓励地方行政长官将他们在原来工作地区的发展经验融合到当前的职位中去。中国的政治人事制度具有其独特性,它为研究者探索领导层的地域间流动所带来的同构效应提供了一个理想环境。这项研究建立了1998年至2011年间的数据集,它包含了地方社会支出数据以及中国省级行政长官理人员的流动历史数据。空间面板分析(SPA)的结果表明,省长的地域间流动性(即横向,自上而下和自下而上)刺激了省级教育和医疗卫生支出的区域同构。实证结果证明了中国中央政府通过地方领导层的地域间流动来缩小地区之间社会福利供给不平等这一举措的有效性。
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One of the great questions for scholars of international relations and economics concerns the relationship between the World Trade Organization (WTO) and the natural environment. Does membership in the multilateral trade regime constrain environmental regulation and increase the environmental burden of national economies? Do countries pay a heavy environmental price for trade liberalization? Although this question has been debated extensively, there is little statistical evidence to contribute the debate. We provide a comprehensive statistical analysis of the environmental effects of joining the multilateral trade regime. We collected data on a variety of environmental policies, institutions, and outcomes that should be influenced by the General Agreementon Tariffs and Trade (GATT)/WTO membership if the predictions of environmental pessimists or optimists are valid. A wide range of statistical models designed to identify the causal effect of the GATT/WTO on the environmental indicators shows that joining the GATT/WTO does not have negative effects on environmental quality.
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Since recent past, a good number of organizations have voluntarily started accepting green practices to make contributions to the environmental well-being by reducing wastes, developing green products, constructing their buildings in the most efficient greener way, recycling their wastes into marketable products and many other ways to make themselves green. Consumers have started demanding for green products and companies are more than happy to satisfy their demand by producing environmentally friendly products. A quest to reduce cost had led to environmentally friendly innovation that has led to a “win-win situation” for all the stakeholders. By going green, companies are attracting more investors to fund them, which would have remained stagnant otherwise without any funds for expansion. In this article, we have examined the main drivers of Corporate Environmentalism (CE) on a global level such as market forces, government and civil regulations. The article discusses the relation between Corporate Environmentalism with stakeholder satisfaction and employee retention and found positive relations among them. Green firms also pressurize their suppliers and other stakeholders to engage in acts of corporate environmentalism to avoid the criticism of green wash. Corporate eco-efficiency brings the benefits of both economic prosperity and environmental protection and states that “A clean environment is actually good for business, for it connotes happy and healthy workers, profits for companies, developing conservation technologies, selling green product and efficiency in material usage”. The article also explains the environmentalism scenario in Indian subcontinent.
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The product composition of bilateral trade encapsulates complex relationships about comparative advantage, global production networks, and domestic politics. Despite the availability of product‐level trade data, most researchers rely on either the total volume of trade or certain sets of aggregated products. In this article, we develop a new dynamic clustering method to effectively summarize this massive amount of product‐level information. The proposed method classifies a set of dyads into several clusters based on their similarities in trade profile—the product composition of imports and exports—and captures the evolution of the resulting clusters over time. We apply this method to two billion observations of product‐level annual trade flows. We show how typical dyadic trade relationships evolve from sparse trade to interindustry trade and then to intra‐industry trade. Finally, we illustrate the critical roles of our trade profile measure in international relations research on trade competition.
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States can seemingly defy the dictates of globalization. In practice, although being pressured by their competitors, states rarely engage in the race to the bottom by downgrading labor rights laws that are politically costly to pursue. I argue that states’ resistance is made possible by adopting more viable policy alternatives, i.e., concluding preferential trade agreements (PTAs). PTAs can generate considerable economic gains in a less politically costly way than does reducing legal labor protection. As a result, it is expected that a pair of states is more likely to form a PTA in the face of policy pressure to lower legal labor protection. I also argue that facing such pressure, these states are more likely to include strong labor provisions in PTAs. Finally, in the face of the policy pressure, states may feel that signing a PTA is a bit less urgent when they are able to diminish practical labor protection. Applying structural equivalence technique to a new global labor rights dataset to capture the policy pressure to lower legal labor protection, I find robust evidence in support of these conjectures.
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To what extent do the short-term negative externalities of fossil fuel use traverse national borders? Transnational negative externalities are thought to motivate international environmental cooperation, but we often lack detailed data on their occurrence. Using a Hybrid Single Particle Lagrangian Integrated Trajectory Model (HYSPLIT), we offer global estimates of the extent of transboundary air pollution from coal-fired power generation. In an advance of the existing literature, we attribute the air pollution experienced in different locales to specific coal-fired power plants, allowing us to evaluate the extent to which pollution from the coal industry is experienced across different jurisdictions. Our results indicate that the issue is most severe in South Asia and East Asia. When weighting by the population of “receiving” locations, India is found to be the largest emitter of transboundary air pollution, followed by China. Residents of Bangladesh are found to experience the most transboundary air pollution by a wide margin.
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This study aims to answer the following research question: how do collaborative networks affect the performance of individual policy actors embedded in the network? We examine this question with a unique dataset on water governance in Dongguan city, China. We hypothesize that collaborative network affects the environmental performance of policy actors through a social influence mechanism, and that the performance of an ego actor will emulate that of alters in the network. We test this hypothesis by estimating network/spatial autoregressive models, and the results confirm the presence of a social influence effect.
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Extant scholarship treats national policies concerning labour rights as a function of economic factors and yet neglects influences of policies among economically competing states. Relying on the policy interdependence theory, this study argues that labour rights policy in a state is dependent on its economic competitors’ labour policy decisions. It specifically maintains that the intensifying competition for foreign direct investment and exports as well as against imports channels negative externalities of deteriorating labour protection in competing states which drives expansive downward policy mimicking and leads to a global decline in labour rights – a race to the bottom. Utilising spatial econometric technique to analyse a new data on labour rights for the period 1994–2009, it finds that labour rights practices are interdependent among economic competitors and experience global deteriorations; whereas labour rights laws remain largely independent due to high policy and reputational costs of lowering them and show more fluctuations.
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Reports results from a quantitative network analysis of international commodity trade flows designed to measure the structure of the world economic system and to identify the roles that particular countries play in the global division of labor. It improves on previous network-analytic studies of the world-economy in two ways. First, by using a newly developed measure of regular equivalence, this operationalization of a nation's roles in the international system is methodologically superior to previous work. Second, we have built a dynamic aspect into the analysis by examining international trade networks at more than one point in time (1965, 1970, and 1980). This allows us to answer questions about change both in the overall structure of the world-economy and in the positions of particular countries in the system. -from Authors
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We present a blockmodel of the world system circa 1965 that is based on four types of international networks: trade flows,military intervention, diplomatic relations, and conjoint treaty memberships. We then report regression analysis of the effects of these structural positions on nations' economic growth (change in GNP per capita) from 1955 to 1970. Net of other plausible determinants, these effects are large in magnitude and entirely consistent with world-system/dependency theories. Further analyses reinforce the interpretation of these findings as the structural, accumulative advantage of location in the core over that in the periphery. Substantively, our results suggest that exogentic theories of economic growth are even more powerful than previous analyses have indicated. -Authors
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This article reports results from a quantitative network analysis of international commodity trade flows designed to measure the structure of the world economic system and to identify the roles that particular countries play in the global division of labor. It improves on previous network-analytic studies of the world-economy in two ways. First, by using a newly developed measure of regular equivalence, this operationalization of a nation's roles in the international system is methodologically superior to previous work. Second, we have built a dynamic aspect into the analysis by examining international trade networks at more than one point in time (1965,1970, and 1980). This allows us to answer questions about change both in the overall structure of the world-economy and in the positions of particular countries in the system. Our findings generally conform to the theoretically expectations of the world-system perspective as well as qualitative descriptions of recent changes in the international division of labor.
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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 recent surge in studies analysing spatial dependence in political science has gone hand-in-hand with increased attention paid to the choice of estimation technique. In comparison, specification choice has been relatively neglected, even though it leads to equally, if not more, serious inference problems. In this article four specification issues are analysed. It is argued that to avoid biased estimates of the spatial effects, researchers need to consider carefully how to model temporal dynamics, common trends and common shocks, as well as how to account for spatial clustering and unobserved spatial heterogeneity. The remaining two specification issues relate to the weighting matrix employed for the creation of spatial effects: whether it should be row-standardised and what functional form to choose for this matrix. The importance of these specification issues is demonstrated by replicating Hays' model of spatial dependence in international capital tax rate competition. Seemingly small changes to model specification have major impacts on the spatial effect estimates. It is recommended that spatial analysts develop their theories of spatial dependencies further to provide more guidance on the specification of the estimation model. In the absence of sufficiently developed theories, the robustness of results to specification changes needs to be demonstrated.
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One of the most important developments over the past three decades has been the spread of liberal economic ideas and policies throughout the world. These policies have affected the lives of millions of people, yet our most sophisticated political economy models do not adequately capture influences on these policy choices. Evidence suggests that the adoption of liberal economic practices is highly clustered both temporally and spatially. We hypothesize that this clustering might be due to processes of policy diffusion. We think of diffusion as resulting from one of two broad sets of forces: one in which mounting adoptions of a policy alter the benefits of adopting for others and another in which adoptions provide policy relevant information about the benefits of adopting. We develop arguments within these broad classes of mechanisms, construct appropriate measures of the relevant concepts, and test their effects on liberalization and restriction of the current account, the capital account, and the exchange rate regime. Our findings suggest that domestic models of foreign economic policy making are insufficient. The evidence shows that policy transitions are influenced by international economic competition as well as the policies of a country's sociocultural peers. We interpret the latter influence as a form of channeled learning reflecting governments' search for appropriate models for economic policy.
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In this paper, we demonstrate the econometric consequences of different specification and estimation choices in the analysis of spatially interdependent data and show how to calculate and present spatial effect estimates substantively. We consider four common estimators—nonspatial OLS, spatial OLS, spatial 2SLS, and spatial ML. We examine analytically the respective omitted-variable and simultaneity biases of nonspatial OLS and spatial OLS in the simplest case and then evaluate the performance of all four estimators in bias, efficiency, and SE accuracy terms under more realistic conditions using Monte Carlo experiments. We provide empirical illustration, showing how to calculate and present spatial effect estimates effectively, using data on European governments' active labor market expenditures. Our main conclusions are that spatial OLS, despite its simultaneity, performs acceptably under low-to-moderate interdependence strength and reasonable sample dimensions. Spatial 2SLS or spatial ML may be advised for other conditions, but, unless interdependence is truly absent or minuscule, any of the spatial estimators unambiguously, and often dramatically, dominates on all three criteria the nonspatial OLS commonly used currently in empirical work in political science.
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In theory, environmental control costs encourage reduced specialization in the production of polluting outputs in countries with stringent environmental regulations (Pethig, 1976; Siebert, 1977; McGuire, 1982). In contrast, countries that fail to undertake an environmental protection program presumably increase their comparative advantage in the production of items that damage the environment. This relationship between trade and environmental policy receives considerable attention whenever countries are in the process of passing new pollution control measures. Groups who oppose existing measures or the implementation of stiffer measures argue that they reduce the ability of polluting industries to compete internationally. ² With foreign trade an increasingly important sector in many of the world’s economies, the arguments of such groups are now frequently weighted very heavily.
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We empirically test existing theories on the provision of public goods, in particular air quality, using data on sulfur dioxide (SO2) concentrations from the Global Environment Monitoring Projects for 107 cities in 42 countries from 1971 to 1996. The results are as follows: First, we provide additional support for the claim that the degree of democracy has an independent positive effect on air quality. Second, we find that among democracies, presidential systems are more conducive to air quality than parliamentary ones. Third, in testing competing claims about the effect of interest groups on public goods provision in democracies we establish that labor union strength contributes to lower environmental quality, whereas the strength of green parties has the opposite effect.
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This article examines whether democracies contribute more to the provision of global public goods. It thus contributes to the debate on the effects of domestic institutions on international cooperation. The focus is on human-induced climate change, in Stern's words Using new data on climate change cooperation we study a cross-section of 185 countries in 1990 words-deeds gaps also in other policy areas, and whether there are systematic differences of this kind between domestic and international commitments and across different policy areas.
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"Voluntary programs have become widespread tools for governments and non-governmental actors looking to shape industry behavior. Voluntary programs can be conceptualized as club goods that provide non-rival but potentially excludable benefits to members. For firms, the value of joining an effective green club over taking the same actions unilaterally is to appropriate the club's positive reputation with stakeholders. Our analysis of about 3,800 US facilities indicates that joining ISO 14001, an important non-governmental voluntary program, improves facilities' compliance with government regulations. We conjecture that ISO 14001 's efficacy stems from its relatively open membership standards and its focus on management systems that provide participants with private benefits while addressing the root causes of regulatory non-compliance. Many government sponsored voluntary programs may be designed to fail because their rigid standards exclude all but highly compliant firms and their focus on performance standards ignores key causes of regulatory non-compliance."
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Over the past forty-five years, bilateral investment treaties (BITs) have become the most important international legal mechanism for the encouragement and governance of foreign direct investment. Their proliferation over the past two decades in particular has been phenomenal. These intergovernmental treaties typically grant extensive rights to foreign investors, including protection of contractual rights and the right to international arbitration in the event of an investment dispute. How can we explain the diffusion of BITs? We argue that the spread of BITs is driven by international competition among potential host countries - typically developing countries - for foreign direct investment. We design and test three different measures of economic competition. We also look for indirect evidence of competitive pressures on the host to sign BITs. The evidence suggests that potential hosts are more likely to sign BITs when their competitors have done so. We find some evidence that coercion plays a role, but less support for learning or cultural explanations. Our main finding is that diffusion in this case is associated with competitive economic pressures among developing countries to capture a share of foreign investment. We are agnostic at this point about the benefits of this competition for development.
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The ASL database provides continuous time-series of sulfur emissions for most countries in the World from 1850 to 1990, but academic and official estimates for the 1990s either do not cover all years or countries. This paper develops continuous time series of sulfur emissions by country for the period 1850-2000 with a particular focus on developments in the 1990s. Global estimates for 1996-2000 are the first that are based on actual observed data. Raw estimates are obtained in two ways. For countries and years with existing published data I compile and integrate that data. Previously published data covers the majority of emissions and almost all countries have published emissions for at least 1995. For the remaining countries and for missing years for countries with some published data, I interpolate or extrapolate estimates using either an econometric emissions frontier model, an environmental Kuznets curve model, or a simple extrapolation, depending on the availability of data. Finally, I discuss the main movements in global and regional emissions in the 1990s and earlier decades and compare the results to other studies. Global emissions peaked in 1989 and declined rapidly thereafter. The locus of emissions shifted towards East and South Asia, but even this region peaked in 1996. My estimates for the 1990s show a much more rapid decline than other global studies, reflecting the view that technological progress in reducing sulfur based pollution has been rapid and is beginning to diffuse worldwide.
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Critics assert that globalization is detrimental to the environment because it encourages location of polluting industries in countries with low environmental regulations. We suggest that globalization might also have positive environmental effects because global ties increase self-regulation pressures on firms in low-regulation countries. Using survey data from firms in China we find that multinational ownership, multinational customers, and exports to developed countries increase self-regulation of environmental performance.© 2001 JIBS. Journal of International Business Studies (2001) 32, 439–458
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This paper investigates how openness to international goods markets affects pollution concentrations. We develop a theoretical model to divide trade's impact on pollution into scale, technique, and composition effects and then examine this theory using data on sulfur dioxide concentrations. We find international trade creates relatively small changes in pollution concentrations when it alters the composition of national output. Estimates of the trade-induced technique and scale effects imply a net reduction in pollution from these sources. Combining our estimates of all three effects yields a somewhat surprising conclusion: freer trade appears to be good for the environment.
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I offer an explanation for the widespread diffusion of neoliberal tax policies in the developed democracies. After accounting for the policy influences of commonly experienced domestic and international forces, I consider several plausible paths of diffusion of neoliberal tax structure. My central argument is that the highly visible 1980s market-conforming tax reform in the United States should be especially important in shaping subsequent tax policies in other polities. There are substantial reasons to believe, however, that domestic political and institutional forces will shape policy-maker assessment of the benefits and costs of neoliberal reforms: the strength of right parties and the degree to which the median voter has moved right should condition adoption of neoliberal tax policy; the institutions of national and sector-coordinated capitalism should also slow the enactment of neoliberal tax reforms. I assess these arguments with empirical models of 1981-98 tax rates on capital in sixteen nations. I find that changes in U.S. tax policy influence subsequent reforms in other polities; in the long term, all nations move toward the U.S. neoliberal tax structure. Analysis also shows, however, that the short-term responsiveness to U.S. tax reforms is notably greater where uncoordinated market institutions are dominant. Theory and extensive qualitative and quantitative evidence indicate that pressures to compete for mobile assets, as balanced against the economic and political costs of adoption, anchor the process of diffusion of neoliberal tax policy. There is little evidence for the view that systematic policy learning or social emulation drove tax policy diffusion.
Article
The relationship between trade liberalisation and the environment has been the subject of a growing body of literature in recent years. One particular focus of attention has been whether environmental regulations are influencing patterns of international trade. This paper aims to examine this issue in the context of the Heckscher-Ohlin-Vanek (HOV) model of trade, but also in a ‘new’ trade model characterised by monopolistic competition and differentiated products. Our use of the HOV model improves upon a well cited study by Tobey (1990) in many ways, not least by allowing for the possible endogeneity of environmental regulations. We find no significant relationship between such regulations and ‘dirty’ net exports. The ‘new’ trade model explains the presence of both intra- and inter-industry trade and we again allow for the possible endogeneity of regulations. We believe this to be the first study to assess the role of environmental regulations within a ‘new’ trade model, but also the first to allow for the endogeneity of regulations in a cross-country model of trade. We find environmental regulations to be a statistically significant determinant of the share of inter-industry trade (net trade) and we find this significance to increase when endogeneity is controlled for.
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The premise that trade suffers from the imposition of environmental policy has a strong element of a priori plausibility, but, surprisingly, has little empirical support. The present paper provides an empirical test of the hypothesis that stringent environmental policy has caused trade patterns to deviate in commodities produced by the world's "dirty" industries. The empirical tests are conducted using the cross-section Hechscher-Ohlin-Vanek model of international trade. It is not that the introduction of stringent environmental control measures has caused trade patterns to deviate from the Hechscher-Ohlin-Vanek predictions. Copyright 1990 by WWZ and Helbing & Lichtenhahn Verlag AG
Article
Over the past forty-five years, bilateral investment treaties (BITs) have become the most important international legal mechanism for the encouragement and governance of foreign direct investment. The proliferation of BITs during the past two decades in particular has been phenomenal. These intergovernmental treaties typically grant extensive rights to foreign investors, including protection of contractual rights and the right to international arbitration in the event of an investment dispute. How can we explain the widespread adoption of BITs? We argue that the spread of BITs is driven by international competition among potential host countries typically developing countries for foreign direct investment. We propose a set of hypotheses that derive from such an explanation and develop a set of empirical tests that rely on network measures of economic competition as well as more indirect evidence of competitive pressures on the host to sign BITs. The evidence suggests that potential hosts are more likely to sign BITs when their competitors have done so. We find some evidence that coercion and learning play a role, but less support for cultural explanations based on emulation. Our main finding is that the diffusion of BITs is associated with competitive economic pressures among developing countries to capture a share of foreign investment. We are agnostic at this point about the benefits of this competition for development.For useful comments on earlier drafts of this article, we thank Bill Bernhard, Bear Braumoeller, Frank Dobbin, Robert Franzese, Jeffry Frieden, Geoffrey Garrett, Tom Ginsburg, Jude Hays, Lisa Martin, Bob Pahre, Mark Ramsayer, Steven Ratner, Susan Rose-Ackerman, and John Sides. For research assistance, we thank Elizabeth Burden, Raechel Groom, and Alexander Noonan.
Article
Some believe that relatively lenient environmental standards give developing countries a comparative advantage in pollution–intensive goods. Thus, freer trade will harm their environment. This paper brings together the literature on openness and growth, and on the environmental Kuznet’s curve, to demonstrate that the opposite may be true. A simultaneous–equations system is derived which incorporates multiple effects of trade liberalization on the environment. Estimation using pooled provincial data on Chinese water pollution, suggests that freer trade aggravates environmental damage via the terms of trade, but mitigates it via income growth. Simulations suggest that the net effect in China was beneficial. JEL Classification: Fl3, Q28, 0l9 Est–ce que la libéralisation du commerce est nuisible pour l’environnement? Un nouveau test. Certains croient que des normes environnementales relativement peu contraignantes donnent un avantage comparatif aux pays en voie de développement dans la production de biens qui polluent intensivement. Donc, un commerce plus libre contribuera à nuire à l’environnement. Ce mémoire synthétise la littérature spécialisée sur l’ouverture des marchés et la croissance, ainsi que sur la courbe de Kuznets, pour montrer que l’inverse est vrai. On dérive un système d’équations simultanées qui incorpore les multiples effets de la libéralisation du commerce sur l’environnement. La calibration de ce système, en utilisant de manière intégrée les données provinciales de pollution de l’eau en Chine, suggère qu’un commerce plus libre aggrave l’état de l’environnement par le truchement du jeu des termes d’échange, mais que cet effet est mitigé par l’effet de croissance des revenus. Des simulations suggèrent que l’effet net en Chine est positif.
Miles+ 1998+ Modeling Races to the Bottom+ Manuscript+ Available at ^http:00irps+ucsd+edu0
  • Kahler
Kahler, Miles+ 1998+ Modeling Races to the Bottom+ Manuscript+ Available at ^http:00irps+ucsd+edu0 assets001406739+pdf&+ Accessed 2 April 2010+
and Thomas Dietz+ 2003+ Footprints on the Earth: The Environmental Consequences of Modernity+ American Sociological Review 68 ~2
  • Richard York
  • Eugene Rosa
York, Richard, Eugene Rosa, and Thomas Dietz+ 2003+ Footprints on the Earth: The Environmental Consequences of Modernity+ American Sociological Review 68 ~2!:279-300+
  • Lake