International Competitiveness and Environmental Regulations

This study follows the standard factor endowment approach to explain the effects of environmental regulations on net exports in different product-based industries. It constructs an econometric model which includes factor endowments and environmental regulations to examine how strict environmental policy impact export competitiveness. Cross-sectional and time series (panel) data for 6 countries and 17 years were used in this model. In this study, capital services increase net exports in labor-intensive industries like textiles, textile products, leather and footwear industries. The effects of increased labor intensity in food, textiles and machinery is higher than for other capital intensive good industries. The environmental regulation imposed in textile, textiles products, leather and footwear industry, and manufacturing (n.e.c) industry negatively impact net exports