1. MFN Tariff Rates and Carbon Emission: Evidence from Lower-Middle-Income Countries
- Author
-
Saibal Kar and Devleena Majumdar
- Subjects
Commercial policy ,Economics and Econometrics ,Multilateral trade negotiations ,020209 energy ,05 social sciences ,Developing country ,chemistry.chemical_element ,Tariff ,02 engineering and technology ,International economics ,Foreign direct investment ,Management, Monitoring, Policy and Law ,chemistry ,Order (exchange) ,0502 economics and business ,0202 electrical engineering, electronic engineering, information engineering ,Economics ,050207 economics ,Carbon ,Panel data - Abstract
The paper empirically investigates whether developing countries may use trade policy as an alternative to environmental policies in order to control carbon emission. It measures the effectiveness of the existing ‘Most Favored Nations’ (MFN) tariff rates applicable to lower-middle income countries and for countries sorted on the basis of manufacturing-to-trade shares, in lowering carbon emission. By applying a fixed effects panel regression method over 16 years, it is found that the MFN tariff rate helps these economies to reduce carbon emission substantially. In addition, the role of foreign direct investment as purveyor of clean products is explored at the cross-country level. The results, at least on the ground of better environmental standards, indicate the need to re-evaluate the choice for protection under the domain of multilateral trade negotiations.
- Published
- 2015