Is Free Trade Green1 - Monetary Authority of Singapore.pdfVIP

66 Macroeconomic Review, October 2010 Special Feature A 11 Is Free Trade Green? Introduction The literature on the nexus between trade and the The debate continues because economists have environment is vast (Dean, 1992). A number of yet to satisfactorily create the frameworks in prominent economists, such as Bhagwati (1988) which to incorporate nature as an input into and Subramanian (1992) fall into the “no linkages” production or to value the utility of an un-spoilt camp arguing that questions of free trade should environment, although there have been be de-linked from those of the environment, increasing attempts to do so. (World Bank, 2005). otherwise, protectionism could easily wreck the global trading system under the guise of This Special Feature explores the simple, but environmental concerns. According to this point emotive, question – is free trade green? – by of view, governments intent on improving the introducing environmental issues into a standard environment would do better to adopt targeted microeconomic analysis of an autarchic economy environmental policies instead of trade policies. which is then opened up to trade with the Dean (1992, p. 22), for example, argues that rest of the world. The general finding is that “trade barriers will be, at best, a second-best although free trade can be compatible with means of reducing environmental damage… Any environmental policies designed to reduce case for more gr