IDEAS home Printed from
   My bibliography  Save this paper

Trade Liberalization and Industrial Pollution in Mexico: Lessons for the FTAA"


  • Kevin Gallagher

    (The Global Development And Environment Institute at Tufts Universty)


As the barriers to hemispheric trade and integration are lowered, it will be asked whether we will we hear the "giant sucking sound" of poorer nations luring U.S. and Canadian firms south to take advantage of low wages and lax environmental regulations? Or, will Latin American nations passively accept this problematical specialization in doing the world's cheap and dirty work? Mexico is the ideal laboratory for such research. Though NAFTA took effect in 1994, trade liberalization in Mexico began long before that. From 1982 to 1996 Mexico transformed itself from one of the most closed to one of the most open economies in the world. As a first step in such efforts, this paper looks at the relationship between industrial pollution and economic activity in Mexico, compares those results to the United States, and draws out implications for the FTAA. The study finds that many of the industries deemed the dirtiest in the world economy are actually cleaner in Mexico than in the US, and the industries labeled the cleanest are dirtier in Mexico. To generalize, this exhibits that trade liberalization can have both positive and negative environmental effects in developing economies. Sectors where plant vintage determines pollution levels can benefit from their ability to take advantage of newer technologies after liberalizing trade, as is the case with the Mexican steel industry. However, if pollution is a function of end of pipe technology, as in the paper industry, pollution levels are determined by levels of regulation, enforcement and compliance, which are lower in Mexico.

Suggested Citation

  • Kevin Gallagher, 2001. "Trade Liberalization and Industrial Pollution in Mexico: Lessons for the FTAA"," International Trade 0106003, EconWPA.
  • Handle: RePEc:wpa:wuwpit:0106003
    Note: Type of Document - PDF; pages: 24; figures: n/a. Other working papers available at

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Levinson, Arik, 1996. "Environmental regulations and manufacturers' location choices: Evidence from the Census of Manufactures," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 5-29, October.
    2. Ros, Jaime & Draisma, Joost & Lustig, Nora & Kate, Adriaan Ten, 1996. "Prospects for growth and the environment in Mexico in the 1990s," World Development, Elsevier, vol. 24(2), pages 307-324, February.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Julie A. Nelson, "undated". "04-03 "Is Economics a Natural Science?"," GDAE Working Papers 04-03, GDAE, Tufts University.
    2. Julie A. Nelson, "undated". "03-11 "Clocks, Creation, and Clarity: Insights on Ethics and Economics from a Feminist Perspective"," GDAE Working Papers 03-11, GDAE, Tufts University.
    3. Francisco Aguayo & Kevin P. Gallagher, "undated". "03-05 "Economic Reform, Energy, and Development: The Case of Mexican Manufacturing"," GDAE Working Papers 03-05, GDAE, Tufts University.
    4. Timothy A. Wise, "undated". "05-02 "Understanding the Farm Problem: Six Common Errors in Presenting Farm Statistics"," GDAE Working Papers 05-02, GDAE, Tufts University.
    5. Colyer, Dale, 2002. "Environmental Impacts Of Agricultural Trade Under Nafta," Conference Papers 19104, West Virginia University, Department of Agricultural Resource Economics.
    6. Qureshi, M.S., 2006. "Trade Liberalization, Environment and Poverty: A Developing Country Perspective," WIDER Working Paper Series 045, World Institute for Development Economic Research (UNU-WIDER).
    7. Julie A. Nelson, "undated". "04-01 "Beyond Small-Is-Beautiful: A Buddhist and Feminist Analysis of Ethics and Business"," GDAE Working Papers 04-01, GDAE, Tufts University.

    More about this item


    Economic theory; Environmental Policy; Sustainability; trade liberalization; NAFTA; FTAA; industrial pollution;

    JEL classification:

    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpit:0106003. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.