Contents :
The economic literature on the interface between environmentalpolicies and international competitiveness has grown rapidly over the lastdecade (Dean 1992). A Major focus of this literature has been the assessment ofwhether differences in countries environmental regulations have affected theproduction and exports of pollution intensive products and/or whether do somecountries strategically manipulate their environmental policies to confer somecompetitiveness benefits on their domestic industries. Though theoreticallythese concerns are well confirmed, unfortunately, there is no conclusive answerto either question and it is rather a case by case issue. For example Low andYeats (1992) have suggested that ?dirty? industries in developed countries havesuffered loss of international competitiveness over the last three decades as aresult of the relatively high environmental standards in developed world.Whereas, Jaffe et al. (1995) conclude that there is relatively little evidenceto support the claim that environmental regulations have adverse effects oncompetitiveness.
Nonetheless, concerns are growing particularly in developing countries aboutthe possible misuse of environmental measures and standards to discriminateagainst the penetration of their products into the developed countries markets.These concerns are coupled with growing domestic and international pressures ondeveloping countries to set up measures to protect the environment, which ifsucceed, may lead to an increase in production costs and reduction in exportsparticularly from pollution intensive industries. Thus there is an importanttrade-environment dimension at stake, which warrants further analysis of theissue. Kuwaitas a small open economy embarking the road of developing and diversifying itsindustrial base certainly shares similar concerns and faces similar effects andtradeoffs as other developing countries. The purpose of this study is to shedlights on the possible impacts of domestic and international environmentalregulations on Kuwaitexports of chemical and petrochemical products.
The rest of the paper is organized as follows:section 2 provides background information on the status of the chemical andpetrochemical industry in Kuwait; section 3 presents the domestic and internationalregulatory regimes affecting the industry; section 4 summarizes the interviewsresults and sketches the possible regulatory scenarios; section 5 presentsmethodology and some exploratory results and section 6 concludes.