Question

Explain fully why there are complex effects of trade and investment liberalization on environmental damages. How can openness to trade raise environmental quality? What does the empirical evidence seem to show about these impacts in various countries?

Answer 1

Trade and investment liberalisation cause excessive expansion and diffusion of industrial activities which cause higher environmental damage, emissions of hazardous chemicals, biodegradable waste production, harmful gas emissions as manufacturing activities rampup which cause greenhouse gas effect and carbon ozone layer depletion.

Openness to trade through stricter norms amd compliance with efficiency in environmental auditing, levying penalties and risk management can help raise environmental quality

Empirically large countries with high PMI or manufacturing or higher trade numbers show high greenhouse gas emission and emissions of harmful hazardous chemicals which cause loss kf biodiversity and ecological imbalance.

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