Free Trade, Economic Growth & Pollution

he fear is widerspread among environmentalists that free trade increases economic growth and that growth harms the environment. That fear is misplaced. Growth enables governments to tax and to raise resources for a variety of objectives, including the atatement of pollution and the general protection of the environment. Without such revenues, little can be achieved, no matter how pure one's motives may be.

"Marathon runner threatens to pull out of 2008 Olympics fearing Beijing's air quality". Newspaper headlines like this one shows the dark side of the economic growth of China : increase in environmental pollution. Since free trade has played an important role in the China's export-led economic growth, enviromentalit's opinion is correct.

Many of the countries, whose economies have grown rapidly due to free trade, have witnessed an increase in environmental pollution. India is another such example.

The increase in income allows people to buy items that were previously luxuries for them. China has seen a big increase in number of cars in the recent years thanks to the economic grwowth. This has increased air pollution in many big Chinese cities.

Free trade has increased the distances between manufacturing location and the final customer e.g. a high percentage of toys bought by american children are made in China. These toys and other goods are shipped by sea to US which leads to a growth in the shipping industry. While this increases government revenue, these big ships pollutes the ocean water. Scientits have studied the harmful effects of the noise caused by big ships on the lives of whales. Using very low frequnecies, whales communicate with each other from a distance of hundreds of miles. But their voices die in the high noise of big cargo ships, which thus act as communication barrries between these mammals.

Free trade allow businesses to move their production facilities to other countries without the need to worry about import duties. Companies look offshore to places where costs are minimum. If governments introduce tough anti-pollution laws production costs go higher and hence the place does not remain that attractive for companies. Businesses may choose to move to other places with weaker laws. Many governments, espacially in developing countries, do not want to see jobs going aboroad and would rather risk harming the environment than making laws that protect environment at the costs of econmic growth. Higher taxes to cover the costs of environmental damage would also lure away bussinesses. Hence the government's ability to limit pollution through legislation or undo damage through taxes is also limited.

The polluted waters of big chinese rivers and the smoked-filled air of Mumbai are clear indications that environmentalists are justified in their fear of enivornmental damage caused by economic growth.