Policy Diffusion of
Auto Emission Standards
- Is there a Race to the Top? October 27, 2009
Eri Saikawa
Science, Technology & Environmental Policy Program
Woodrow Wilson School of Public & International Affairs
Princeton University
Question
Methodology
Analysis 1
Analysis 2
Conclusion
g/km adopted standards
Number of countries
1st Adoption of Comprehensive
Emission Standards
803
Mexico
70
2.5
60
Europe
502
40
1.5
30
Japan
CO
Bangladesh
US
HC+NOx
China
India
201
10
0.5
0
1965
0
1970
Japan 78
1975
1980
1985
US 83Year
1990
1995
2000
Euro 1
2005
2010
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Dissertation Question
Policy Diffusion of Auto Emission Standards
Why does diffusion occur? What is the impact?
1. Mechanisms of Policy Diffusion
•
Analyze mechanisms of diffusion and impact of
adoption on automobile exports
2. Impact on Air Quality, Health & Climate
•
Impact of China’s pollution
Question
SO42-
OC
Methodology
Analysis 1
Analysis 2
Conclusion
Impact of China’s
Aerosols on Global
Surface
Concentrations
in
2000
[µg m-3]
BC
Saikawa, et al. “Present and potential future contributions of sulfate, black and organic carbon aerosols from China
to global air quality, premature mortality and radiative forcing” Atmospheric Environment 43 (2009) 2814-2822.
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Impact of China’s Aerosols on
Global Premature Mortality in 2000
China
474,250
Korea & Japan
11,280
Southeast Asia
10,270
South Asia
830
North America
320
Rest of the World
690
Saikawa, et al. “Present and potential future contributions of sulfate, black and organic carbon aerosols from China
to global air quality, premature mortality and radiative forcing” Atmospheric Environment 43 (2009) 2814-2822.
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Dissertation Question
Policy Diffusion of Auto Emission Standards
Why does diffusion occur? What is the impact?
1. Mechanisms of Policy Diffusion
•
Analyze mechanisms of diffusion and impact of
adoption on automobile exports
2. Impact on Air Quality, Health & Climate
•
•
Impact of China’s pollution
Scenario analyses of China’s adoption
3. China’s Policymaking Process
•
Impact of domestic politics on standards adoption
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Questions & Arguments

Why did emission standards diffuse?
Countries adopted standards to enhance the
competitiveness of their auto industries.

What happens after adoption?
Except for low-income countries, automobile exports
increase.
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Mechanisms of Diffusion

4 major mechanisms in the Policy
Diffusion literature:
• Competitiveness
• International Pressure
• Normative Emulation
• Learning

The “California Effect” (Vogel, 1997)
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Competitiveness Mechanism

The California Effect
• Exporting countries adopt emission
standards when major importing countries
adopt standards

Competitor Effect
• Exporting countries adopt emission
standards when competing exporting
countries adopt standards
Question
Methodology
Analysis 1
Analysis 2
Conclusion
My Contribution



Extend competitiveness mechanism to
environmental standards
Expand the “California Effect” theory to
include developing countries
Empirical testing
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Methodology

Analysis 1. Event History Analysis
 Identify mechanisms of policy diffusion

Analysis 2. Gravity Model of Trade
 Assess impact of policy diffusion on
competitive advantage in trade
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Dependent Variable


Created a database of the years that
countries first adopted auto emission
standards
Dichotomous coding
• Code 0 – without adoption
• Code 1 – with adoption
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Independent Variables

Competitiveness:
• The California effect – Share of auto
exports to countries with standards
• Competitor effect – Trade similarity
• Competitor effect – Auto exports as share
of GDP
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Independent Variables

International Pressure:
• ODA & Official Aid as share of GDP

Normative Emulation:
• Number of countries that have adopted
standards

Learning:
• Number of environmental IGOs of which
a country is a member
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Control Variables

Real GDP per capita

EU membership

CO2 emissions from transport sector
(proxy for tail-pipe emissions)
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Standards Adoption




Tested using logit function
Analyzed all countries 1975 – 2000
Cluster by country
Include year dummies
  
ln 
   0  1Sharet 1   2Compett 1   3 AutoGDPsharet 1   4ODAt 1
 1   t
  5 normt 1   6learning t 1  CONTROLS t   t tTt   t
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Interpretations


Competitiveness appears to be the
major factor for standards adoption
High-income countries
• “California effect” & “Competitor effect”

Developing countries
• Upper-middle: “California effect”
• Lower-middle & Low: “Competitor effect”
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Qualitative Evidence

78 interviews in China and Japan
• Managers in the automobile industry
(Honda, Toyota, Hyundai, GM, VW, Geely)
• Government officials (national and local)
• Researchers at national institutions, think
tanks, and universities
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Qualitative Evidence

Main findings
• Japanese government pushed automobile industry
to develop technologies
• Japanese auto industry opposed adoption of
standards
• Chinese government adopted the standards to
reduce air pollution and to increase auto industry
competitiveness
• Foreign-venture automobile firms in China lobbied
Beijing to adopt European standards
• Difficult for local automobile industry to meet the
requirements
Question
Methodology
Analysis 1
Analysis 2
Conclusion
200000
300000
China Auto Exports to All Countries
0
100000
Emission Standards
Adoption
1950
1960
1970
1980
Year
1990
2000
Question
Methodology
Analysis 1
Analysis 2
Conclusion
150000
200000
China Auto Exports to Countries with Standards
0
50000
100000
Emission Standards
Adoption
1950
1960
1970
1980
Year
1990
2000
Question
Methodology
Analysis 1
Analysis 2
Conclusion
600000
India Auto Exports to All Countries
0
200000
400000
Emission Standards
Adoption
1950
1960
1970
1980
Year
1990
2000
Question
Methodology
Analysis 1
Analysis 2
Conclusion
100000 200000 300000 400000 500000
India Auto Exports to Countries with Standards
0
Emission Standards
Adoption
1950
1960
1970
1980
Year
1990
2000
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Impact of Standards on Exports
Gravity Model of trade
 Standard framework to assess the
effects of bilateral trade

Estimates the impacts of emission
standards on automobile exports
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Impact of Standards on Exports

4 variables to consider:
•
•
•
•
Stdit: exporter’s adoption of standards
Stdjt: importer’s adoption of standards
Botht : both exporter/importer adopting standards
ln(Stdt) : log of number of countries with standards
ln Exportijt   0   1Stdit   2 Std jt   3 Botht   4 ln( Stdt )
 1 ln Dist ij   2 ln( GDPit / Popit  GDPjt / Pop jt )   3 ln( GDPit  GDPjt )
  4Contiguityijt   5 Alliance ijt   6 Democracyijt   7 Autocracyijt   7 MIDijt  8Colonyijt
  9GATTijt  10 Languageijt  11PTAijt  12 EU ijt   t tTt   i  i Ci   ijt
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Question
Methodology
Analysis 1
Analysis 2
Conclusion
Interpretation


Adoption of emission standards
 except for low-income countries,
positive effects on auto exports
Adoption of emission standards gives
countries a competitive advantage
Question
Methodology
Model 1
Model 2
Conclusion
Conclusion



Competitiveness is the major mechanism
Market incentives lead to more stringent
environmental standards
Stringent emission standards
 better environment, less premature
mortality and more auto exports
Question
Methodology
Model 1
Model 2
Conclusion
Policy Implications


Other “environmentally friendly”
products may also create competitive
advantage
Policy diffusion may apply to….
• Product Standards for Appliances
• Energy Efficiency Standards

Developed countries can influence
developing countries’ behavior