Trade Liberalization and its Environmental Impact in India: An Empirical Analysis

Authors

  • Ranjan Aneja Assistant Professor, Department of Economics, Central University of Haryana, Mahendergarh, Haryana, India
  • Ummed Singh Assistant Professor, Department of Economics, University of Rajasthan, Jaipur, Rajasthan, India

DOI:

https://doi.org/10.51983/arss-2018.7.1.1376

Keywords:

Trade liberalization,, Pollution haven effect, Quantitative restrictions, Central pollution control board, NAFTA

Abstract

The debate on the impact of trade on environment is pertinent considering the increasing volume of trade among world nations and the changes in environmental quality. In India, this increase was higher because of the gradual lifting of the quantitative restrictions and reduction in tariffs after trade liberalization in 1991. The pollution haven effect occurs when trade liberalization, coupled with lax environmental regulations results in increasing economic activities in pollution intensive industries. Using industry level data for the period 1998-2008, for fifty eight manufacturing industries in India, this paper looks at output and export trends and attempts to examine, whether trade liberalization is associated with a shift in production and exportation towards pollution intensive goods industries (pollution haven effect). Manufacturing output has been significantly higher from the water pollution intensive sectors compared to the air and toxic pollution intensive sectors. This evidence provides some support for concerns that there is significant contribution in production of manufacturing industries from dirty industries. The results of the study suggest that while trade liberalization measures have been pursued to promote economic growth in India but they have led to some potentially adverse environmental consequences.

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Published

30-04-2018

How to Cite

Aneja, R., & Singh, U. (2018). Trade Liberalization and its Environmental Impact in India: An Empirical Analysis. Asian Review of Social Sciences, 7(1), 111–119. https://doi.org/10.51983/arss-2018.7.1.1376