Abstract
A wide acceptance has developed that trade liberalization is closely correlated with numerous economic benefits like competition, efficiency and choice. The effects of international trade on the environment are, however, far more complex. As the scale of economic activity intensifies, production may shift to regions with more permissive environmental standards, both of which exacerbate environmental problems. The international exchange that is unfettered by price distortions promotes efficient resource use and production techniques, increased access to environmental technologies, and stimulates innovation, which is all potentially beneficial for the environment. Additionally, the balance of evidence indicates that with respect to certain pollutants like Sulphur dioxide, trade liberalization leads to overall environmental improvements. This is, however, not the case with other gases like CO2. Traditionally, concern about environmental degradation has always centered on domestic production patterns. Nonetheless, as complex global supply chains have emerged, the focus as a matter of necessity has shifted to domestic consumption patterns.
Introduction
International trade and investment are one of the major globalization trends of our time. As it has now become evident, globalization is a complex trend propelled by many forces and with complex effects. These trends can be expected to have varying and even unfavorable environmental impacts. The challenge, therefore, lies in harnessing the positive while diminishing the negative aspects. In other words, it is about finding the best trade-off. In an international system with anarchical qualities, striking this balance may be problematic (Frankel, 2009) . In response to this, the last few years have seen a proliferation of anti-globalization demonstrations. Within the realm of environmental activism, some scholars have made the proposition that the solution lies in reversing the clock of industrialization that underlies global trade. Such a proposition would, however, be tantamount to requiring people to impoverish themselves and forget that environmental quality and economic income are both worthy objectives.
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Much of the literature on the nexus between global trade and the environment has paid attention to a number of interrelated questions. The tremendous focus has been given to the possibility of globalization leading to pollution-intensive industries being shifted to countries with comparatively weak environmental policies, what has been termed as the pollution haven hypothesis (Zamir, 2014) . This means that some countries, due to their economic backwardness, may specialize in dirtier production with the view of exporting to countries specialized in cleaner production. In this regard, poorer countries like those in Africa are said to possess a ‘comparative advantage’ in production. It is, however, not yet evident that a combination of open markets and poverty has led to higher population levels. Similarly, researchers are yet to find evidence for the hypothesis that capital-intensive countries or low-density countries have a comparative pollution advantage.
It is, in fact, not obvious that intensified trade will lead to increased pollution. As countries produce more and pollution becomes a challenge, governments, especially democratic ones, may face pressure to respond more to environmental concerns. It worth noting that this pressure may not always be effective as countries seek to remain competitive in international markets; what has been called the ‘race to the bottom hypothesis’ (Zamir, 2014) . Furthermore, democratic pressure may not always lead to a reduction in pollution levels. In fact, the reverse may happen as it becomes, for instance, more challenging to adapt to new forms of clean energy that implies job losses. The demand for the revival of coal jobs in the US offers an example of democratic pressure failing to curb environmental pollution. Additionally, authoritarian regimes as is the case with China may not be responsive to popular concerns about the environment. In this sense, international trade may intensify pollution.
The race to the bottom is arguably the strongest basis for international trade and investment anxiety since it puts downward pressure on governments to lower environmental standards leading to environmental damage that is global in scale. Captains of industry and unions members have always been preoccupied with foreign competition. As domestic regulation increase costs, they worry they will lose competitive advantage to other firms. As such, there is occasionally the observation of profit and employment warnings. Competitiveness alarm, therefore, becomes a cover for domestic producers to apply political pressure on governments to lower regulatory burdens (Frankel, 2009) . In brief, therefore, the race to the bottom hypothesis is a concern that free international trade and investment brings; rather than increasing environmental standards, it lowers them. Multinationals and lobby groups are deemed to have adequate coercive power to bring about this downward spiral.
Economic research findings on the significance of environmental regulation as a determinant of firms’ international competitiveness remain inconclusive. Paying too much attention to environmental regulation to this extent may not be warranted since multinationals seem to be more concerned with issues of market access and labor costs more than local environmental regulation (Harris, 2002) . This might, however, be revealing about the state of international environmental regulations such that they do not feature prominently in multinational decision making. Indeed, a robust regime of environmental standards would be expected to figure prominently in the considerations of multinationals, especially those that are pollution intensive.
Environmental improvements may be realized amid intensified international trade. Frankel and Rose found that as incomes levels rise thanks to global trade, so does environmental quality: like saving, technological progress and investment and other sources of growth trade raises income levels. At nascent stages of economic development, growth causes a deterioration in environmental quality. However, when growth exceeds a particular level of per capita income, improvements in environmental quality are witnessed. In the case of Sulphur dioxide, for instance, the authors put the critical per capita income at $5000-$6000 per year (Frankel, 2009) . Beyond this level, pollution emanating from great scale sectors like manufacturing is significantly outweighed by the shift to less polluting sectors like services as well as due to a shift from dirtier to cleaner techniques. To this extent, the authors contend that environmental pollution may be a temporary phenomenon that passes at higher levels of per capita income, which gives countries the capacities to clean their air.
Trade could also improve environmental quality through the so-called gains from trade hypothesis. Here it is argued that globalization could stimulate technical innovation, which leads to the development of cleaner production techniques. As global companies compete for greater productivity levels within a context of stringent environmental regulations, they are forced to adopt clean technologies (Harris, 2002) . Adoption of a corporate code of conduct and increased exercise of consumer power is said to intensify this process. The possibility of international trade lifting environmental is premised on what in the US has been termed as the ‘California effect’ (Frankel, 2009) . As the largest or more prosperous states adopt stringent regulations, for instance, on auto pollution control, other states tend to follow suit. The result is that regional standards become national standards through borrowing. Internationally, ‘California’s path setting role’ can be played by the European Union and the United States. Multinational Corporations are frequently the propellers of these effects. They bring with them clean and advanced technologies from high standard origins to areas they are not known (Frankel, 2009) . It is not that multinational corporations always bring the highest environmental standards in countries they operate, rather, the standards they employ tend to be, on average, higher than most those found in host countries undertaking similar activities on their own.
Conclusion
Globalization in the form of international trade has the potential to cause far-reaching environmental damage. As global production intensifies in a bid to respond to opening up of markets, so do heavy industries that are pollution intensive. Since national borders cannot restrict pollution, moving of manufacturing to other parts of the world does not eradicate the environmental danger but merely spreads it. Environment fears are worsened by what has been termed as the race to the bottom. This is where countries in a bid to maintain their competitiveness lower environmental restrictions leading to an environmental regulation regime extremely weak to respond to the pollution threat. The result is unmitigated environmental degradation.
It is, however, not automatic that trade liberalization will always lead to environmental damage. At higher levels of income, countries shift from heavy manufacturing to service-based sectors that are considerably less polluting. Thus, for instance, at income per capita levels of between $5000 and $6000, the levels of Sulphur dioxide emissions decline. Also, as international trade puts pressure on competing companies within the context of strict environmental regulation, they are forced to develop more innovative technologies that reduce the pollution effect. MNCs also tend to take their comparatively superior and less polluting technologies to areas they were previously unknown. More crucially, in a globalized world, environmental regulations in one part of the world may lead to them quickly spreading to other parts, therefore, raising the environmental regulation standard. Based on this perspective, therefore, environmental pollution is a momentary phenomenon that vanishes as countries develop. It is possible for international trade to affect environmental quality in either direction. International regulation seems to be the most important factor in curbing these environmental externalities. It is an illusion, it has been emphasized, to imagine that environmental issues emanating from globalization can be addressed through unilateral state action.
References
Frankel, J. (2009). Environmental effects of international trade. Working Paper Series. Harvard University School of Government .
Harris, J. (2002). Trade and the environment. Global Development And Environment Institute , 1-22.
Zamir, P. B. (2014). What is the impact of international trade on natural environment. Information society and sustainable development .
