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impact of industrial devolopment in indai
Environmental Regulation in Indian Manufacturing Industries: Production vs. Quality1

Aditi Jamalpuria
Research Scholar
Centre for Economic Studies and Planning
School of Social Sciences
Jawaharlal Nehru University
New Delhi- 110067.
E-mail address: aditi_jamalpuria@yahoo.com aditi.jamalpuria@gmail.com

Abstract

In this paper, we have tried to analyze the impact of environmental regulation on the production and the quality status of manufacturing industries across Indian states. This is done to discern the effect of environmental regulation on the competitiveness of the industries across Indian states. Using Ordinary Least Squares we check for the impact of investment in pollution control and status of environmental regulation on the production of manufacturing across Indian states, thereafter, we check for the impact of these variables on the acquisition of quality status certification by the manufacturing units. The quality status certificate considered for the purpose is the ISO9000 certificate which is given to those factories, which take up all round measures in their industrial projects for quality maintenance. We have used the state-wise ASI 1997-1998 which gives the data for investment in pollution control as well as the data for ISO9000 certified units for the Indian states. Percentage of factories taken up pollution abatement facilities, percentage of capital investment of the total capital investment for pollution control and percentage of running expense of the total running expense for pollution control is used to construct a dummy variable which indicates the status of environmental regulation in a state. The OLS regression results reveal that investment in pollution control negatively affects the production of manufacturing but positively contributes to the acquisition of quality status certification by the manufacturing units in the states. Moreover, states with effective environmental


References: Gupta, S. (1996), ‘Environmental Policy and Federalism in India’, National Institute of Public Finance and Policy Working Paper, New Delhi. Halvorsen, R. and R. Palmquist (1980), The Interpretation of Dummy Variables in Semi Logarithmic Equations, American Economic Review, Volume-70, No.3 , p 474-475. Human Development Report, 2001. Jaffe, A. B. et.al. (1995), ‘Environmental Regulation and the Competitiveness of US manufacturing: What Does the Evidence Tell Us?’ Journal of Economic Literature, Volume-33, p 132-163. Mandal, S Murty, M. N. and S. Kumar (2001), ‘Win-Win Opportunities and Environmental Regulation: Testing of Porter Hypothesis for Indian Manufacturing Industries’, Discussion Paper Institute of Economic Growth, New Delhi. Palmer, K., W Porter, Michael E. (1990), The Competitive Advantage of Nations, New York: Free Press. Porter, Michael E. and van der Linde (1995), ‘Towards a New Conception of the Environment-Competitiveness Relationship’, Journal of Economic Perspectives, Volume-9, p 97-118. Ray, N. and B. Chaudhuri (2000), ‘Economics of Environmental Management- Can Indian Economy Afford to Shut down Dirty industries?’ Central Statistical Organization (CSO) Working Paper, Government of India. Xepapadeas, A. and D. Zeeuw (1999), ‘Environmental policy and Competitiveness: the Porter Hypothesis and the Composition of Capital’, Journal of Environmental Economics and Management, Volume-37, p 165-182.
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