Handouts 1-15 - 2/27/2011 Lecture1Handout Economics3610...

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2/27/2011 1 Lecture 1 Handout Economics 3610 Cornell University Spring 2011 Main Topics The different types of trade: goods, services, migration, foreign direct investment, (and offshoring) Why flows of different types of trade occur between different types of countries Some kind of difference between countrie Some kind of difference between countries The role of international organizations in trade The effects of trade and trade policies on: Labor (workers), Environment, Development, and Overall welfare Lecture 2 Handout Economics 3610 Cornell University Spring 2011 DATE: December 12, 1991 TO: Distribution FR: Lawrence H. Summers Subject: GEP 'Dirty' Industries: Just between you and me, shouldn't the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Least Developed Countries]? I can think of three reasons: 1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that . 2) The costs of pollution are likely to be non linear as the initial increments of pollution probably have very low cost. I've always thought that under populated countries in Africa are vastly UNDER polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste. 3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity . The concern over an agent that causes a one in a million change in the odds of prostate cancer is obviously going to be much higher in a country where people survive to get prostate cancer than in a country where under 5 mortality is 200 per thousand. Also, much of the concern over industrial atmosphere discharge is about visibility impairing particulates. These discharges may have very little direct health impact. Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing. While production is mobile the consumption of
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This note was uploaded on 12/10/2011 for the course BTRY 3010 at Cornell University (Engineering School).

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Handouts 1-15 - 2/27/2011 Lecture1Handout Economics3610...

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