Edited by Kevin P. Gallagher
Chapter 5: Trade, Natural Resources and Developing Countries
Edward B. Barbier In the current era of globalization two concerns have been expressed about the environmental eﬀects of expanding world trade. The ﬁrst, which is a more frequently heard criticism, is that trade is ‘bad’ for the environment. Economic arguments underlying this view usually cite alarm over economic scale relative to ecological limits and the implied eﬀects of globalization on incentives for domestic environmental regulation (see Daly and Goodland, 1994; Rees, 2006). The counter-argument in economics has been that ‘in general, trade is not the root cause of environmental problems, which are due to market and intervention failures’ (OECD, 1994, p. 8; see also Copeland and Taylor, 2003). Many of the other chapters in this handbook address this trade versus environment debate; therefore it will not be the focus of the following chapter. Instead, I shall focus here on a second concern, which suggests that trade could be ‘bad’ for development: many developing countries are currently failing to manage their natural resources eﬃciently and sustainably for successful development, and ‘opening to trade’ could be perpetuating the mismanagement problem. This view stems from recent empirical ﬁndings that many resource-dependent developing countries – those countries with a high percentage of resource-based commodities to total exports or to GDP – tend to have lower levels of real GDP per capita, lower growth rates, higher poverty levels and a higher proportion of their populations living in poverty (Barbier, 2005; Bulte et al., 2005; Ding and Field, 2005; Mehlum et al., 2006; Neumeyer,...
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