Environmental stringency and competitive export strengths: a study in context of environmentally sensitive goods in G20
International Journal of Social Economics
ISSN: 0306-8293
Article publication date: 26 July 2023
Issue publication date: 9 January 2024
Abstract
Purpose
Trade of environmentally sensitive goods (ESGs) is often exposed to countries with less stringent regulations suggesting that those countries have comparative advantage in the polluting sector. The Group of Twenty (G20) members are among the highest polluters, globally. Different stringency policies are enacted time to time in G20 to control environment pollution. However, the impact of policy stringency on export performance of ESGs is seldom examined. The paper aims to address some of the issues concerning this matter.
Design/methodology/approach
The present study aims to address the short run and long-run association between Revealed Comparative Advantage of ESGs and Environmental Policy Stringency Index for the period of 1990–2019 in G20. Periodic fluctuations and time adjustment mechanism are also studied. Second Generation Panel Cointegration, Vector Error Correction, Impulse Response Function and Variance Decomposition methods are employed to address the objectives.
Findings
Result is evident that more exposure to stringent environmental regulations reduces the comparative advantage of ESGs in the long run. But there is no evidence of the short-run relationship between the variables. The possible reason could be that new regulations enacted prove fruitful in the long run.
Originality/value
The novelty of the study is to focus on inter linkages between stringency and global export competitiveness in G20, almost nonexistent in the past studies. The study also provides a road map to policymakers to find out potential ways for sustainable development by balancing environmental stringency measures and international trade.
Peer review
The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-08-2022-0560
Keywords
Citation
Mahajan, A. and Majumdar, K. (2024), "Environmental stringency and competitive export strengths: a study in context of environmentally sensitive goods in G20", International Journal of Social Economics, Vol. 51 No. 1, pp. 98-114. https://doi.org/10.1108/IJSE-08-2022-0560
Publisher
:Emerald Publishing Limited
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