International Law, Industrial Location, and Pollution

The dominant position of economists on trade and environment is that increasing trade raises living standards, which provide the economic basis for reduced pollution. Professors Chapman, Agras, and Suri present a perspective that raises very different points. First, the dramatic growth of manufacturing in East Asia for global markets is based entirely (or nearly so) on the importation of processed pollution-intensive raw materials. For a typical product in this global system, a U.S. consumer purchasing an Asian product made from imported resources benefits from a lower price and a cleaner local environment; however, energy use and pollution associated with the fabrication of the product occur in the country of origin of the raw materials, and in the country where the final product is manufactured Second, a modest logical exercise in economic theory shows that the presence of trade between two regions with strongly different pollution control practices can increase world total pollution. Turning again to empirical data, the decline in energy per real dollar of GNP in the OECD countries has been exactly offset by an increase in energy intensity elsewhere. As a result, world energy intensity (energy use per real dollar of GNP) has stayed almost constant, and world energy use has been accelerating. Gross World Economic Product per capita has not risen above its value of 14 years ago. Actual data on global emissions are limited However, estimates of three major world air pollutants show each with accelerating growth. It is likely that actual data, if available, would show exponential growth now for nuclear waste accumulation, sewage, toxic metals and chemicals exposure, and other types of pollutants. The empirical perspective we see is very different from the commonly held viewpoint. In summary, on a global basis, the international economy is characterized by increasing trade and world economic product, stagnation in gross economic product per capita, accelerating energy use, and exponential growth in emissions of major pollutants