Global Export of Environmental Goods and the Role of Institutional Factors

During the last two decades, growth of international exchange of goods and services, has increased environmental problems including climate change and global pollution significantly. Thus, the global effort to reduce environmental problems, the importance of production and international trade of environmental goods has been placed on the agenda of many developed and developing countries. One of the most important efforts and measures in this regard, is institutional development which includes strict environmental regulations, rule of law and improving the quality of regulations. The main goal of this paper is to investigate the importance and impact of institutional factors on the export of environmental goods in developing and developed countries within the framework of the gravity model. To estimate the model, a panel data was built for the period of 1996-2021, using a sample of 129 developing countries and 41 developed countries, by applying the least squares method with fixed effect. The results show that strict environmental policies, the rule of law and the quality of regulations encourage the export of environmental goods in developed countries, but this result is not true for developing countries. While the aforementioned institutional factors are known to be the main drivers of the export of environmental goods for the export purposes of the group of countries under study. Therefore, the global effort to improve the standard and effective environmental policy framework, and to improve the quality of regulations and governance is considered beneficial for the export development of environmental goods.