Date of Submission


Date of Award


Institute Name (Publisher)

Indian Statistical Institute

Document Type

Doctoral Thesis

Degree Name

Doctor of Philosophy

Subject Name

Quantitative Economics


Economics and Planning Unit (EPU-Delhi)


Das, Satya P. (EPU-Delhi; ISI)

Abstract (Summary of the Work)

In the wake of substantial trade liberalization in the world economy over the last two decades and growing environmental consciousness, the issues of the impacts of international goods trade and foreign direct investment (FDI) on local and global environment are becoming increasingly contentious. Whilst trade and FDI have been said to bring higher incomes and well-being for all, these are seen to act as "magnifiers" of environmental deterioration - especially in the developing countries. On the other hand, growing environmentalism is perceived to act as an impediment to freer trade and investment flows across countries. Hence, the central issues are how free trade and FDI affect sovereign nations environmental policies and thereby their environment and welfare.To understand why and how international trade issues get linked to concerns of envi- ronmental degradation requires a careful study of the origin of environmental problems. Environmental degradation typically arises from economic (production and consumption) activities, but tends to get accentuated due to either market failures (i.c. absence of mar- kets for environmental goods and services or poorly defined property rights over common Introduction and Summary pool resources) or policy failures (i.c. distortions in governmental pricing and regulatory policies) that often exaggerate (rather than correet i market failures. Both kinds of failures result in either under or over utilization of the environmental good. In the idealized world where first-best policies for internalizing the full environmental costs and benefits of cco- nomic activities are present. trade liberalization wouid always cuhance welfare. Present these distortions, trade could potentially exacerbate the consequences of poor environmental poli- cies by impacting both the level and geographical distribution of pollution even generating pollution havens.Similar to the international commodity trade-environment debate, the deliberations on links between FDI and environmetnt also address concerns of environmental degradation. These would generally arise from increase in the scale of cconomic activitics, and creation of pollution havens in jurisdictions having low environmental standards. both associated with private investment decisions of firms. In the context of FDI, however, two additional aspects require careful analysis: first, FDI as a conduit for transfer of environmentally sound technologies. and second, environmental effects of international competition for FDI. The latter relates to the popular debate on potential for 'race to the bottom' in environmental regulation as foreign investors seek out countries with less stringent environmental standards. Both of these issues are particularly relevant for developing countries.Another important concern that has now emerged under the trade-cnvironment debate pertains to the influence of special-interest politics on governments' policies. Driven by "competitiveness' concerns, industrics often appeal to the government against raising of en- vironmental standards. The environmental lobbies do just the opposite. In the context of the ongoing debate on trade-environment linkages, the moot question is whether, on account of political-economy considerations, the efficacy of international trade to attain larger wel- fare for all, whilst ensuring sustainable use of environmnental and natural resources, is being impeded.


ProQuest Collection ID:

Control Number


Creative Commons License

Creative Commons Attribution 4.0 International License
This work is licensed under a Creative Commons Attribution 4.0 International License.


Included in

Mathematics Commons