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Trade and the Environment (cont.) As poor countries grow richer, possibly partly due to trade, they produce more and can consume more, leading to more environmental degradation. But as countries grow richer, they want to pay for more stringent environment protection. Both of these ideas are represented as an environmental Kuznets curve: an inverted “U-shaped” relationship between environmental degradation and income per person Fig. 12-3: The Environmental Kuznets Curve Trade and the Environment (cont.) Because rich countries usually have strict environmental regulations and poor countries do not, environmentally hazardous activities may be moved to poor countries. A pollution haven is a place where an economic activity that is subject to strict environmental controls in some countries is moved to (sold to) other countries with less strict regulation. Yet, there is evidence that pollution havens are insignificant relative to the pollution that occurs without international trade. Fig. 12-4: Carbon Dioxide Emissions Trade and the Environment (cont.) Pollution in some countries may cause a negative externality for other countries. For example, production in China could cause air pollution in Korea (or on the West Coast of the U.S.). To the degree that pollution causes negative externalities for other countries, they should want to include it in international negotiations. Emissions of carbon dioxide is an example of pollution that causes a negative externality and that has been included in international negotiations. Trade and Culture Some activists believe that trade destroys culture in other countries. This belief neglects the principle that we should allow people to define their culture through the choices that they make, not through standards set by others. Also, any economic change, not just trade, leads to changes in everyday life. Summary One argument for an activist trade policy is that investment in high-technology industries produces externalities for the ec
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