Trade trademayhavebadeffectsbutsometimesthe

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Unformatted text preview: ensive product is exported Environment and future generation may lose if Natural resources are exported Sad truth about trade Trade may have bad effects, but sometimes the alternative is worst Poor countries will sell their resources, their people may engage in the least desirable jobs producing export product Trade polices do not follow text books­ some governments may gain from trade in natural resources and enhance it Dictatorships may lead poor countries to sell their citizens health and resources Trade model assume competition­ ignore dynamics and the fact that government may control extraction MC extraction plus future A B MC of extraction International price of environment B actual mining of Environment A Optimal level Exporting the environment Poverty lead to taking more risks "Value of life" is the cost saving of a "statistical" life as implied by safety regulations. "Value of life" in poorer countries is likely to be smaller than richer countries. As countries become richer, environmental and safety regulations become stricter. Production activities are less pollution intensive International trade may lead to the concentration of waste material, lower environmental quality, and lower human health in poorer nations. Trade and waste disposal Environmental quality may be viewed as consumption goods that are empirically found to have high­income elasticity. They will be consumed more intensively in richer countries. Environmental quality characteristics and human health may be viewed as inputs in the production process. Poorer countries have relatively more of these inputs (relative to, say, capital); therefore, they should: • Specialize in pollution­intensive products. • Adopt technologies that are intensive in pollution. • Provide waste disposal services. • Have more unrestricted worker safety and human health regulations. . Ownership politics and trade Private+external lity+future cost Private+ Externality cost IF the owner Of waste disposal facility does not Pay for the Externality cost And is myopic trade is bad Demand for Waste disposal Private Marginal cost Does trade lead to deterioration of environmental quality? Less regulation may provide an edge But greener technology may lead to tougher regulations Evi...
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This note was uploaded on 03/18/2010 for the course ECON C125 taught by Professor Zelberman during the Spring '09 term at University of California, Berkeley.

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