A recent academic paper, titled: "Building a New Reputation: The Impact of Adopting Voluntary Standards", traces a positive correlation between the voluntary adoption of environmental standards by firms and their export performance, particularly in markets where consumers are more willing to pay an extra premium for environmentally sustainable goods. These findings offer a new contribution to the field of economics. If the thesis holds true, it suggests a potential "reverse Robin Hood" effect, as these standards could inadvertently create economic disadvantages for developing countries engaged in the supply of raw materials essential for the production of these environmentally sustainable goods. Here is how it would work: developed countries set stricter rules to protect the environment. These rules increase the costs of developing countries that supply commodities used as inputs for manufacturing environmentally friendly products in developed countries. Due to limited bargaining power with respect to buyers, importers and distributors in developed economies, producers and suppliers within developing countries experience a contraction of their profit margins. In contrast, finished products that incorporate environment standards create opportunities for businesses in developed countries to export higher-value, processed products to rapidly expanding economies.
Friday, May 09, 2025
