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NAFTA and the Environment: What Can the Data Tell Us?

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  • Gamper-Rabindran, Shanti

Abstract

Critics of trade liberalization agreements such as the North American Free Trade Agreement (NAFTA) have expressed concerns that polluting industries will locate in developing countries to evade more stringent regulation, with adverse environmental consequences. A study of NAFTA's effects on U.S.-Mexico trade finds that despite differences in the stringency of U.S. and Mexican environmental policies, NAFTA did not cause Mexico to specialize in dirtier industries between 1989 and 1999. Regarding the location of manufacturing production during the NAFTA transition, although growth was fastest in the congested Mexican border region, growth declined in the congested central region and increased in the less congested interior region, with all regions shifting toward less polluting industries. Most of the observed measures of air quality in the border region, which can serve as an indicator of NAFTA's short-term scale effects, do not exhibit significant breaks in their trend of improvement.

Suggested Citation

  • Gamper-Rabindran, Shanti, 2006. "NAFTA and the Environment: What Can the Data Tell Us?," Economic Development and Cultural Change, University of Chicago Press, vol. 54(3), pages 605-633, April.
    • Handle: RePEc:ucp:ecdecc:y:2006:v:54:i:3:p:605-33
    DOI: 10.1086/500029
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    References listed on IDEAS

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    Cited by:

    1. Arik Levinson, 2009. "Technology, International Trade, and Pollution from US Manufacturing," American Economic Review, American Economic Association, vol. 99(5), pages 2177-2192, December.
    2. Arik Levinson, 2010. "Comment on "Trade Growth, Production Fragmentation, and China's Environment"," NBER Chapters, in: China's Growing Role in World Trade, pages 469-472, National Bureau of Economic Research, Inc.
    3. Simon Condliffe & O. Ashton Morgan, 2009. "The effects of air quality regulations on the location decisions of pollution-intensive manufacturing plants," Journal of Regulatory Economics, Springer, vol. 36(1), pages 83-93, August.
    4. Lipford Jody W. & Yandle Bruce, 2011. "NAFTA, Environmental Kuznets Curves, and Mexico's Progress," Global Economy Journal, De Gruyter, vol. 10(4), pages 1-20, January.
    5. Arik Levinson, 2010. "Pollution and international trade in services," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 10(2), pages 93-105, June.
    6. Shapiro, Joseph S. & Walker, Reed, 2015. "Why is Pollution from U.S. Manufacturing Declining? The Roles of Trade, Regulation, Productivity, and Preferences," IZA Discussion Papers 8789, Institute of Labor Economics (IZA).
    7. Joseph S. Shapiro & Reed Walker, 2018. "Why Is Pollution from US Manufacturing Declining? The Roles of Environmental Regulation, Productivity, and Trade," American Economic Review, American Economic Association, vol. 108(12), pages 3814-3854, December.
    8. Claire Brunel, 2017. "Pollution Offshoring and Emission Reductions in EU and US Manufacturing," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(3), pages 621-641, November.
    9. Luis A. Perez-Batres & Van V. Miller & Michael J. Pisani & Irene Henriques & Jose A. Renau-Sepulveda, 2012. "Why Do Firms Engage in National Sustainability Programs and Transparent Sustainability Reporting?," Management International Review, Springer, vol. 52(1), pages 107-136, February.
    10. Qirjo, Dhimitri & Pascalau, Razvan & Krichevskiy, Dmitriy, 2019. "CETA and Air Pollution," MPRA Paper 95608, University Library of Munich, Germany.
    11. Cherniwchan, Jevan, 2017. "Trade liberalization and the environment: Evidence from NAFTA and U.S. manufacturing," Journal of International Economics, Elsevier, vol. 105(C), pages 130-149.
    12. Luis Perez-Batres & Jonathan Doh & Van Miller & Michael Pisani, 2012. "Stakeholder Pressures as Determinants of CSR Strategic Choice: Why do Firms Choose Symbolic Versus Substantive Self-Regulatory Codes of Conduct?," Journal of Business Ethics, Springer, vol. 110(2), pages 157-172, October.
    13. Lucas W. Davis & Matthew E. Kahn, 2008. "International Trade in Used Durable Goods: The Environmental Consequences of NAFTA," NBER Working Papers 14565, National Bureau of Economic Research, Inc.

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