The Economics of East Asian Integration
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The Economics of East Asian Integration

A Comprehensive Introduction to Regional Issues

Edited by Masahisa Fujita, Ikuo Kuroiwa and Satoru Kumagai

This study is intended to be the most comprehensive textbook on economic integration in East Asia. It introduces the reader to various issues related to the topic such as institutional building of FTAs; production networks and the location choice of MNEs; R & D and innovation; infrastructure development and transport costs; international migration and service trade; monetary integration; regional disparity and poverty. It also deals with critical energy, environmental and agricultural concerns. Each chapter contains ample data and rigorous analyses, complemented by illustrative box articles.
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Chapter 18: Trade and the Environment

Michikazu Kojima and Etsuyo Michida


Michikazu Kojima and Etsuyo Michida 18.1 INTRODUCTION Continued prosperity throughout the course of economic integration in East Asia depends on the environmental consequences. If the increase in trade and investment flow results in environmental degradation that poses serious threats to health, amenities, and productivity, fear of further integration might be spawned. The growth of East Asian economies has been accompanied by pollution, global warming, waste generation, deforestation, losses in biodiversity, and so on. Does economic growth driven by increased trade necessarily magnify environmental degradation? To our surprise, we found that economic integration may work to promote improvement in some environmental issues; however, freer trade does exacerbate other issues. To anticipate the impacts of trade on various environmental issues and adopt effective policy measures for prevention of adverse effects, it is important to reach an understanding of the trade–environment linkages by disentangling causalities and aggregating the different forces involved. Specifically, the impacts of trade on the environment through changes in industrial composition, environmental regulation and income are addressed in various studies. Although a consensus has not yet been reached, understanding of these linkages has progressed. In practice, precautionary measures have been applied to prevent potential problems that may arise from increased cross-border transactions within free trade areas. The EU and NAFTA have established networks and organizations to monitor and prevent potential environmental problems in a systematic way, whereas Asia, in the process of economic integration, has applied precautionary measures on an ad hoc basis. This chapter begins by showing the...

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