Impact of trade liberalization on pollution and poverty

This chapter describes the Lao economy, including trade and poverty in Laos. Trade liberalization might have positive or negative consequences for poverty. Trade liberalization can also have either a positive or negative impact on the environment. As in other Least Developed Country, environmental regulation is weak in Laos, so trade liberalization might increase pollution and degrade natural resources. The authors conduct the literature review in three parts: the effect of trade liberalization on poverty, on pollution, and on Laos. The impact of trade liberalization on poverty is complex, and it has various channels such as economic growth and stability, households and markets, wages and employment, and government revenue. Various studies used the computable general equilibrium model to examine the impact of trade liberalization on poverty in developing countries. Trade liberalization has a positive impact on growth, but its impact is relatively small. Surprisingly, trade liberalization also decreases CO₂ emissions, but the percentage of change is very small.