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Trade, the Environment, and Impacts on State Agricultural Exports

Author(s): David Karemera, Won Koo, Louis Whitesides

Citation: David Karemera, Won Koo, Louis Whitesides, (2012) "Trade, the Environment, and Impacts on State Agricultural Exports," Journal of Management Policy and Practice, Vol. 13, Iss. 4, pp. 11 - 20

Article Type: Research paper

Publisher: North American Business Press


International trade theory predicts that the relative level of a country’s resource endowments, trade policy, environmental regulations, and level of technology would jointly determine production specialization and trade pattern of the country. This study develops state export share and alternative environmental risk models to evaluate the effects of resource endowments, prices, and environmental risk factors on agricultural exports and environment. A simultaneous system of the environmental risk and export share models was estimated by using the nonlinear estimation method outlined in RATS (2009). The results reveal that crop prices, state GDP, state farm GDP and technological changes were found to be major determinants of the state export shares. The results also suggest that NAFTA had no negative effect on the environment. The study found that the European Union (EU) and expansion of its membership led to significant reduction in state agricultural exports due mainly to the effect of trade diversion in the EU expansion.