Environmental Impacts of Globalization and Trade

An analytic exploration of whether trade hurts or helps the environment.

The relationship between trade and the environment has become an increasingly contentious issue between economists and environmentalists. Economists maintain that trade helps the natural environment because rich countries can better afford to protect their unspoiled areas. Environmentalists counter that the pursuit of national wealth drives global environmental degradation and that free trade accelerates the process.

Instead of arguing one side or the other, this book uses new analytic methods, including a systems dynamics model, to seek an answer to the impasse. Using lateral pressure theory to account for politics within and among nations, it extends the theory's initial application (which was to explain the onset of war) to the environment by specifying additional connections between the natural and social spheres. In making explicit the complex causal connections between world trade and environmental degradation, the book finds that GNP increases in the rich, developed countries are linked to deforestation in the poorer, developing countries. It also uses insights derived from this finding to critique current trade policy prescriptions.

Although researchers have made significant advances in understanding the determinants and consequences of innovation, until recently they have paid little attention to how innovation functions as an economic process. This book examines the nature and workings of markets for intermediate technological inputs. It looks first at how industry structure, the nature of knowledge, and intellectual property rights facilitate the development of technology markets. It then examines the impacts of these markets on firm boundaries, the division of labor within the economy, industry structure, and economic growth. Finally, it examines the implications of this framework for public policy and corporate strategy. Combining theoretical perspectives from economics and management with empirical analysis, the book also draws on historical evidence and case studies to flesh out its research results.