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Trade, Growth, and Environmental Quality

Author

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  • Sibel Sirakaya
  • Stephen Turnovsky
  • Nedim Alemdar

Abstract

This paper examines linkages between international trade, environmental degradation, and economic growth in a dynamic North–South trade game. Using a neoclassical production function subject to an endogenously improving technology, North produces manufactured goods by employing labor, capital, and a natural resource that it imports from South. South extracts the resource using raw labor, in the process generating local pollution. We study optimal regional policies in the presence of local pollution and technology spillovers from North to South under both non‐cooperative and cooperative modes of trade. Non‐cooperative trade is inefficient due to stock externalities. Cooperative trade policies are efficient and yet do not benefit North. Both regions gain from improved productivity in North and faster knowledge diffusion to South regardless of the trading regime.
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Suggested Citation

  • Sibel Sirakaya & Stephen Turnovsky & Nedim Alemdar, "undated". "Trade, Growth, and Environmental Quality," Working Papers UWEC-2007-01-P, University of Washington, Department of Economics.
    • Handle: RePEc:udb:wpaper:uwec-2007-01-p
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    File URL: http://www.econ.washington.edu/user/sturn/Sirakaya-Turnovsky-Alemdar.pdf
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    1. is not listed on IDEAS
    2. Stephen Devadoss & Jude Bayham, 2013. "US Ethanol Trade Policy: Pollution Reduction or Domestic Protection," Review of International Economics, Wiley Blackwell, vol. 21(3), pages 568-584, August.

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