Impact on the Environment of Thailand's Trade with OECD Countries

Kakali Mukhopadhyay

Chapter 2 in Asia-Pacific Trade and Investment Review, 2006, vol. 2, pp 25-46 from United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)

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.

Keywords: Thailand; FDI; environment; pollution; international trade; WTO; OECD (search for similar items in EconPapers)
JEL-codes: F1 (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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