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Impact on the Environment of Thailand's Trade with OECD Countries

In: Asia-Pacific Trade and Investment Review

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  • Kakali Mukhopadhyay
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    Abstract

    The impact of trade liberalization on the environment is a matter of debate. Two conflicting hypotheses have emerged from the debate. One, the pollution haven hypothesis, suggests that the developed countries impose tougher environmental policies than do the developing countries, which results in distortion of existing patterns of comparative advantage. Thus, the polluting industries shift operations from the developed to the developing countries; developing countries therefore become "pollution havens." The second hypothesis, the factor endowment hypothesis, predicts that trade liberalization will result in trade patterns consistent with the Heckscher-Phlin-Vanek theory of comparative advantage based on factor endowment differentials. Rich countries are well endowed with capital. Since capital-intensive goods are often also pollution-intensive, factor-endowment theories of international trade predict that rich countries specialize in polluting goods. Thus, the manifestation of the pollution haven hypothesis is in direct conflict with the factor endowment hypothesis. This debate is of great concern among economists, environmentalists and the World Trade Organization.

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    This chapter was published in:

  • Xuan Zengpei & Joong-Wan Cho & Marc Proksch & Yann Duval (ed.), 2006. "Asia-Pacific Trade and Investment Review," STUDIES IN TRADE AND INVESTMENT, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), volume 2, number aptir2414, December.
    This item is provided by United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) in its series STUDIES IN TRADE AND INVESTMENT with number aptir2414_kakali.

    Handle: RePEc:unt:ecchap:aptir2414_kakali

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    Related research

    Keywords: Thailand; FDI; environment; pollution; international trade; WTO; OECD;

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    References

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    1. Andreas Waldkirch & Munisamy Gopinath, 2004. "Pollution Haven or Hythe? New Evidence from Mexico," International Trade 0412005, EconWPA.
    2. Machado, Giovani & Schaeffer, Roberto & Worrell, Ernst, 2001. "Energy and carbon embodied in the international trade of Brazil: an input-output approach," Ecological Economics, Elsevier, vol. 39(3), pages 409-424, December.
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    Cited by:
    1. Chakraborty, Debashis & Mukherjee, Sacchidananda, 2010. "Relationship between Trade, Investment and Environment: A Review of Issues," MPRA Paper 23333, University Library of Munich, Germany.
    2. Sanderson, Todd & Ahmadi-Esfahani, Fredoun Z., 2010. "Climate change and Australia’s comparative advantage in broadacre agriculture," 2010 Conference, August 26-27, 2010, Nelson, New Zealand 96493, New Zealand Agricultural and Resource Economics Society.

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