The effects of environment and technology on agricultural export

The impact of environmental policy on international trade has received a great deal of attention over the decades. Theory predicts that the relative level of a country's environmental policy, technology, and factor endowments will jointly determine international trade and specialisation. This study develops alternative empirical models of export shares to evaluate the effects of technology and efficiency, factor endowments, prices, and environmental risk factors on the exports. The models are applied to state agricultural export data since 1973 through 1996. Our findings support the hypothesis that states lose a comparative advantage in trade by stringent environmental regulations. Output prices and technological changes are found to be major determinants of export shares.