The Effects of Korean Domestic Environmental Regulations on Trade Performance: Evidence from Korean Manufacturing Industries

This study analyzes the relationship between Korea’s environmental stringency and trade performance. According to the pollution haven hypothesis, environmental stringency levies additional cost on firm and burden to economic activity. While, according to Porter’s theory, well designed environmental policies might actually enhance productivity and lead to export. Using panel data from 2006 to 2014, panal dynamic model and difference-GMM estimation provides the results that environmental stringency has a negative impact on trade performance. This results potentially reflect that the Korean environmental regulations have focused on compulsory the command & control system.