The new OECD study analyses historic export data in high and low pollution industries in 23 advanced countries and six emerging economies. It takes the domestic value added in export data and uses an OECD Environmental Policy Stringency indicator that ranks countries according to more or less stringent policies.
It shows that countries with stringent environmental laws suffer a very small disadvantage in pollution-intensive sectors such as steel-making, chemicals, plastics and fuel products. This is compensated by an edge gained in cleaner industries like machinery or electronics. Both effects are tiny compared to factors including market size, the lifting of trade tariffs, globalisation and a countryâs intrinsic assets.
For example, domestic value added in exports of goods from high-pollution industries from the most environmentally stringent countries (Denmark, Germany and Switzerland) to the BRICS rose by USD 11.157 billion from 1995 to 2008. That figure would have been 3% percent higher if green laws werenât so stringent, yet the same stringent laws boosted exports in cleaner industries by 3% – almost the same amount in dollars.
Countries where manufacturers already pollute less should therefore gain global market share as tougher domestic laws are put in place. Industries and firms that become cleaner over time will prosper under more stringent policies, but those that fail to adapt will see their export performance erode.
