Export Bans, Environmental Protection, and Unemployment

This study investigates the case for an export ban on intermediate goods which generate environmental damage. Since export restrictions on intermediates have long been advocated as a method of stimulating domestic industries in developing countries, we consider whether the case for an export ban is strengthened or weakened by the presence of unemployment in the industrial sector. We find that, in the short run, an export restriction worsens unemployment, thus weakening the case for a ban. In the long run, however, the results are reversed. If the environmental problem is severe, unemployment has a negligible impact on the case for an export ban.