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The Globalization of Market Failure? International Trade and Sustainable Agriculture

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  • James Boyce

Abstract

The economic case for trade liberalization rests on its capacity to extend the reach of the market's fabled invisible hand. With the globalization of the market, however, comes a globalization of market failures arising from the fact that prices do not to capture 'external' costs and benefits to third parties. Whether the social gains from trade liberalization will exceed the social losses from the attendant market failures is an empirical question, one which cannot be answered by theoretical fables. This essay considers the impact of two types of trade-driven market failures on sustainable agriculture. The first is the displacement of natural fibres by synthetic substitutes, illustrated by the competition between jute and polypropylene. The second is the erosion of crop genetic diversity, illustrated by the impact of NAFTA on campesino maize farming in Mexico. In both cases, ‘free trade’ pits pits environmentally ‘clean’ production in the global South against ‘dirty’ production in the North - the opposite of the what is often assumed in discussions of the environmental impacts of North-South trade.

Suggested Citation

  • James Boyce, "undated". "The Globalization of Market Failure? International Trade and Sustainable Agriculture," Published Studies ps3, Political Economy Research Institute, University of Massachusetts at Amherst.
  • Handle: RePEc:uma:perips:ps3
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    3. de Janvry, Alain & Sadoulet, Elisabeth & de Anda, Gustavo Gordillo, 1995. "NAFTA and Mexico's maize producers," World Development, Elsevier, vol. 23(8), pages 1349-1362, August.
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    5. James Boyce, 1996. "Ecological Distribution, Agricultural Trade Liberalization, and In Situ Genetic Diversity," Published Studies ps14, Political Economy Research Institute, University of Massachusetts at Amherst.
    6. Levy, Santiago & van Wijnbergen, Sweder, 1991. "El maíz y el acuerdo de libre comercio entre México y los Estados Unidos," El Trimestre Económico, Fondo de Cultura Económica, vol. 58(232), pages 823-862, octubre-d.
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    Cited by:

    1. LeClair, Mark S. & Franceschi, Dina, 2006. "Externalities in international trade: The case for differential tariffs," Ecological Economics, Elsevier, vol. 58(3), pages 462-472, June.
    2. Timothy A. Wise, "undated". "Policy Space for Mexican Maize:Protecting Agro-biodiversity by Promoting Rural Livelihoods," GDAE Working Papers 07-01, GDAE, Tufts University.

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