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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

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.

Suggested Citation

  • Kakali Mukhopadhyay, 2006. "Impact on the Environment of Thailand's Trade with OECD Countries," STUDIES IN TRADE AND INVESTMENT,in: Asia-Pacific Trade and Investment Review, volume 2, chapter 2, pages 25-46 United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  • Handle: RePEc:unt:ecchap:aptir2414_kakali
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    File URL: http://www.unescap.org/tid/publication/aptir2414_kakali.pdf
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    References listed on IDEAS

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    1. Andreas Waldkirch & Munisamy Gopinath, 2004. "Pollution Haven or Hythe? New Evidence from Mexico," International Trade 0412005, University Library of Munich, Germany.
    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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    Citations

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    Cited by:

    1. Debashis Chakraborty & Sacchidananda Mukherjee, 2013. "Do Trade and Investment Flows Lead to Higher CO2 Emissions? Some Panel Estimation Results," Working Papers 1321, Indian Institute of Foreign Trade.
    2. Chakraborty, Debashis & Mukherjee, Sacchidananda, 2010. "Relationship between Trade, Investment and Environment: A Review of Issues," MPRA Paper 23333, University Library of Munich, Germany.
    3. Pao, Hsiao-Tien & Tsai, Chung-Ming, 2011. "Multivariate Granger causality between CO2 emissions, energy consumption, FDI (foreign direct investment) and GDP (gross domestic product): Evidence from a panel of BRIC (Brazil, Russian Federation, I," Energy, Elsevier, vol. 36(1), pages 685-693.
    4. 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.

    More about this item

    Keywords

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

    JEL classification:

    • F1 - International Economics - - Trade

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