Working Paper: NBER ID: w9823
Authors: Brian R. Copeland; M. Scott Taylor
Abstract: For the last ten years environmentalists and the trade policy community have engaged in a heated debate over the environmental consequences of liberalized trade. The debate was originally fueled by negotiations over the North American Free Trade Agreement and the Uruguay round of GATT negotiations, both of which occurred at a time when concerns over global warming, species extinction and industrial pollution were rising. Recently it has been intensified by the creation of the World Trade Organization (WTO) and proposals for future rounds of trade negotiations. The debate has often been unproductive. It has been hampered by the lack of a common language and also suffered from little recourse to economic theory and empirical evidence. The purpose of this essay is set out what we currently know about the environmental consequences of economic growth and international trade. We critically review both theory and empirical work to answer three basic questions. What do we know about the relationship between international trade, economic growth and the environment? How can this evidence help us evaluate ongoing policy debates? Where do we go from here?
Keywords: No keywords provided
JEL Codes: Q0; F1; O0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| income per capita (D31) | environmental quality (Q50) |
| increased income (E25) | increased pollution in poorer countries (F64) |
| increased income (E25) | improved environmental quality in wealthier nations (F64) |
| trade (F19) | income levels (J31) |
| income levels (J31) | environmental policies (Q58) |
| stringency of pollution regulations (Q52) | trade flows (F10) |
| pollution haven effect (F64) | industries relocating to countries with laxer regulations (L51) |