Sunday, September 27, 2009

International Trade in Waste Revisited

Will Larry Summers comment on the mutual benefits of this globalization? Here is direct evidence of the pollution haven effect at work. As Europe ratches up its pollution regulation, waste is now being exported to poorer nations. Unlike in the case of international trade in manufacturing, there is no offsetting factor endowment effect. While the New York Times does a good job of documenting the fact, they implicitly are saying that this trade "is bad". From an environmental standpoint, I understand their claim if they are saying that "in the absence of trade, Europe would have figured out ways and passed laws to reduce the amount of garbage produced because they would have anticipated that they would be stuck with any waste that would be generated because they would know that they couldn't "outsource it"".

But, a Larry Summers might say; "once the waste is created, doesn't the Coasian logic ask us to consider whether there are mutually beneficial gains to trade between the poor and rich countries?".

Don't forget about the Summers Memo . It does raise some interesting debate points.

This article promoting Denmark as a nation of "Consumer Cities" catering to tourists is also worth reading.