Environmental regulation and international trade patterns for agro-industrial under a South-North Perspective

Abstract

This paper aims at examining the relation between the international trade and the environment, particularly focused on sensitive agribusiness sectors. It consists on an empirical test to the conflicting positions supported by economists, some following the traditional approach (trade-off or neoclassical), while others supporting the Porter’s hypothesis, which considers that impacts of the stricter environmental regulation can benefit the trade competitiveness. A Heckscher-Ohlin- Vanek model was applied to net exports as the dependent variable. The agricultural products analyzed were total agriculture, rice, maize, soybean, wheat, dairy and swine; run for 97 countries, divided as developing and developed, in a cross-section approach. This modeling allows including the environmental endowment as explanatory variables. Moreover the Environmental Performance Index (Esty et al, 2008) was also tried as explanatory variables in order to catch any effect of the environmental regulation on the trade patterns. Results were not conclusively as they show that the net exports of the selected products, considered environmentally sensitive, can be affected even positively or negatively (neoclassical approach) by the environmental regulation. The results depend on the products. A remarkable outcome to highlight is that the dummy for developing countries and developed countries was significant, pointing that for rice, for example, it makes difference being a developing country, as well as it does for wheat, being a developed country.Trade, environmental regulation, agribusiness, Environmental Economics and Policy, International Relations/Trade,