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Globalization, North-South Industrial Location and Environmental Competition

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Author Info
RIEBER Arsène (Center for Analysis and Research in Economics (CARE), University of Rouen)
TRAN Thi Anh-Dao (Economics Centre of University Paris-North (CEPN, University Paris 13) and Center for Analysis and Research in Economics (CARE), University of Rouen)
Abstract

Relying on a North-South model of economic geography, our paper attempts to discuss the management of global pollution issues such as greenhouse gas emissions. As firms are increasingly mobile, they become sensitive to differences in environmental standards across countries and subject the regulatory power of a country to the rule of competition. In this context, we first evaluate the consequences of a passive ecological dumping from the South. We find that the Northern region undergoes a phenomenon of industrial relocation with a fall in its real income. In addition, the outcomes on global pollution abatement appear ambiguous. Globalization of the world economy, by changing the location decisions of firms, can make global pollution even worse. This calls for international cooperation between the North and the South. We then turn to investigate the outcomes of a harmonization of environmental policies. Although better from an ecological point of view, this second scenario harms the South both in terms of industrial relocation and real income.

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Publisher Info
Paper provided by Development and Policies Research Center (DEPOCEN), Vietnam in its series Working Papers with number 02.

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Length: 19 pages
Date of creation: 2008
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Handle: RePEc:dpc:wpaper:0208

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Related research
Keywords: Economic geography; Global pollution; Environmental competition;

Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
R10 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General

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