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Trade, Growth, and Environmental Quality *
Author(s) -
Sirakaya Sibel,
Turnovsky Stephen J.,
Alemdar Nedim M.
Publication year - 2009
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/j.1467-9396.2008.00800.x
Subject(s) - economics , externality , environmental quality , productivity , stock (firearms) , capital (architecture) , resource (disambiguation) , international trade , natural resource economics , international economics , microeconomics , macroeconomics , ecology , history , archaeology , biology , mechanical engineering , computer network , computer science , engineering
This paper examines linkages between international trade, environmental degradation, and economic growth in a dynamic North–South trade game. Using a neoclassical production function subject to an endogenously improving technology, North produces manufactured goods by employing labor, capital, and a natural resource that it imports from South. South extracts the resource using raw labor, in the process generating local pollution. We study optimal regional policies in the presence of local pollution and technology spillovers from North to South under both non‐cooperative and cooperative modes of trade. Non‐cooperative trade is inefficient due to stock externalities. Cooperative trade policies are efficient and yet do not benefit North. Both regions gain from improved productivity in North and faster knowledge diffusion to South regardless of the trading regime.