ABSTRACT
Are trade and growth good or bad for the environment? As competition becomes more global, people are concerned that relatively lenient environmental regulation and lax enforcement in developing countries give them a comparative advantage in producing pollution-intensive goods. Lowering trade barriers may encourage a relocation of polluting industries from countries with strict environmental policy to those with lenient policy. These shifts may increase global pollution or lead to race-to-the-bottom environmental policy practices because countries may become reluctant to tighten environmental regulations
trade. On the other hand, some researchers argue that openness could improve developing countries’ environment by increasing local income, introducing more energy-efficient production technology, and increasing competition and crowding out less-efficient factories.
