Trade, growth, and environmental quality
Author
Sirakaya, S.
Turnovsky, S.J.
Alemdar, N.M.
Date
2009Source Title
Review of International Economics
Print ISSN
0965-7576
Volume
17
Issue
5
Pages
906 - 926
Language
English
Type
ArticleItem Usage Stats
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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. © 2009 The Authors. Journal compilation © 2009 Blackwell Publishing Ltd.
Keywords
economic growthenvironmental degradation
environmental quality
international trade
knowledge
neoclassical theory
North-South relations
pollutant source
pollution policy
spillover effect
theoretical study
trade performance
trade-environment relations