Trade Liberalization and Pollution Intensive Industries in Developing Countries: A Partial Equilibrium Approach
AbstractEconomic theory suggests that liberalization of trade between countries with differing levels of environmental protection could lead pollution- intensive industry to concentrate in the nations where regulations are lax. This effect, often referred to as the “pollution haven” hypothesis, is much discussed in theory, but finds only ambiguous support in empirical research to date. Methodologies used for research on trade and environment differ widely; many are difficult to apply to practical policy questions. We develop a simple, partial equilibrium model explicitly designed to analyze the effects of a change in trade policy. Our model analyzes the relative concentrations of “clean” and “dirty” industries in two nations or regions, before and after the policy change. While lacking the theoretical rigor and mathematical intricacy of other modeling methods, our approach has the advantages of transparency and accessibility to a broad range of analysts and policy makers.
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Bibliographic InfoPaper provided by EconWPA in its series International Trade with number 0106004.
Length: 21 pages
Date of creation: 13 Jun 2001
Date of revision:
Note: Type of Document - PDF; pages: 21; figures: n/a. This paper was published in Methodologies for Assessing the Environmental Impacts of Trade Liberalization Agreements. Dale Andrews, ed. (Paris: OECD, 2000). It has been reprinted with permission. Other working papers available at www.gdae.org
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trade liberalization; partial equilibrium; pollution haven; trade; environmental policy; NAFTA;
Find related papers by JEL classification:
- F1 - International Economics - - Trade
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
- L5 - Industrial Organization - - Regulation and Industrial Policy
- O0 - Economic Development, Technological Change, and Growth - - General
- Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
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