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Arguments for a Better World: Essays in Honor of Amartya Sen, Volume 2Society, Institutions, and Development$
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Kaushik Basu and Ravi Kanbur

Print publication date: 2008

Print ISBN-13: 9780199239979

Published to Oxford Scholarship Online: May 2009

DOI: 10.1093/acprof:oso/9780199239979.001.0001

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Imposed Environmental Standards and International Trade †

Imposed Environmental Standards and International Trade †

Chapter:
(p.411) Chapter 21 Imposed Environmental Standards and International Trade
Source:
Arguments for a Better World: Essays in Honor of Amartya Sen, Volume 2
Author(s):

Robert M. Solow

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199239979.003.0022

There has been much debate, in connection with regional free-trade agreements, about the desirability of a rich country like the U.S. imposing on poor countries the requirement that they adopt higher environmental standards than they would choose for themselves. Although the language is always high-minded, one may suspect that the motivation is largely protectionist. This chapter uses a simple and conventional model to suggest that the main consequence of this proposal is likely to be lower real wages in the poor country. The cost of environmental improvement is borne by poor-country workers. The argument rests primarily on the assumption/fact that labour is a relatively immobile and capital a relatively mobile factor of production.

Keywords:   environmental standards, trade agreements, factor mobility, wages, labour, free-trade agreements

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