Trade Partnerships and Environmental Performance in Developing Countries

• Date: 01 December 2017
• DOI: 10.1177/1070496517729727
• Published date: 01 December 2017
• Subject Matter: Articles

Article

Trade Partnerships and

Environmental

Performance in

Developing Countries

Jonas Gamso

1

Abstract

A large scholarship surrounds the relationship between trade and the environment,

with much of it centering on whether trade produces a race to the bottom or a race

to the top in the environments of developing countries. While the effects of trade on

key pollutants and on specific environmental policies have been widely attended to,

scholars have not yet considered if and how trade impacts developing nations’ envir-

onmental performance, broadly speaking. This is a critical matter, as the effects of

trade on the environment can only be appreciated fully through holistic assessment

of the environment and environmental protection. The study that follows helps to fill

this void through analysis of an all-inclusive measure of environmental performance

that encompasses indicators of policy and practice. Findings demonstrate that

exporting to the United States and the European Union improves environmental

performance in developing countries; however, no such effect accompanies trade

with other countries.

Keywords

trade, policy convergence, diffusion, North–South, pollution, environmental policy,

environmental performance, environmental practice

Environmental degradation in developing countries has been granted signif‌icant

attention in recent years, as journalists and researchers have identif‌ied a series of

environmental crises. 2016 alone brought UNICEF’s report that 300 million

children around the world (including 220 million from South Asia) are breathing

highly toxic air (Anand, 2016), a f‌inding that pollution is the largest cause of

Journal of Environment &

Development

2017, Vol. 26(4) 375–399

!The Author(s) 2017

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DOI: 10.1177/1070496517729727

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1

Thunderbird School of Global Management, Arizona State University, Glendale, AZ, USA

Corresponding Author:

Jonas Gamso, Thunderbird School of Global Management, Arizona State University, 1 Global Place,

Glendale, AZ 85306, USA.

Email: jonas.gamso@thunderbird.asu.edu

death in developing countries, killing more than HIV/AIDS, malaria, and tuber-

culosis combined (Landrigan & Fuller, 2016), and newspaper articles highlight-

ing ‘‘noxious’’ smog in Tehran (Erdbrink, 2016) and Delhi (Barry, 2016).

As environmental problems mount in the developing world, environmental

policies and the ef‌fectiveness of those policies are paramount. Scholars of envir-

onmental studies have analyzed the environmental policies and practices of

nation-states and the factors leading to sound environmental performance

(Fiorino, 2011). However, to this point, there has been surprisingly little atten-

tion to the role of trade. While the impacts of trade on specif‌ic indicators have

been widely studied (e.g., Copeland & Taylor, 1994; Grossman & Krueger, 1993;

Kanemoto, Moran, Lanzen, & Geschke, 2014; Muradian & Martinez-Alier,

2001) and the ef‌fects of trade on individual policies by state and private-sector

actors have received attention (Perkins & Neumayer, 2012; Prakash & Potoski,

2006; Saikawa, 2013), the ef‌fect of trade on environmental performance, oper-

ationalized in broad terms, remains unexplored.

The study that follows seeks to f‌ill this void in the literature by investigating

the relationship between trade and environmental performance in developing

countries. I do this through an analysis of a holistic measure of environmental

performance that encompasses environmental policies as well as indicators that

speak to the ef‌fectiveness of these policies. Using a sample of 83 low- and

middle-income countries

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over a time series of 11 years (2000–2010), I consider

the relationship between this holistic environmental performance measure and a

series of trade variables that capture the environmental performance levels of

sample countries’ major trade partners.

There is reason to think that a trade-based transfer of environmental per-

formance does occur, as developing countries adopt rigorous environmental

standards when those of their major trade partners are stringent. Consumers

living in high-performing countries may demand green products from producers

abroad, such that having a good environmental record becomes a competitive

advantage for developing countries and their f‌irms. Likewise, governments rep-

resenting countries with stringent environmental performance levels may use

trade policy to prod their partners in the developing world into improving

their standards, either in an attempt to protect their own local companies

from poorly regulated competitors or as part of ef‌forts to provide environmental

leadership internationally.

While it could be that all well-regulated countries ef‌fectively promote good

environmental performance by trade partners, some appear more likely to do so

than others. In particular, the United States and the countries of the European

Union uniquely carry three characteristics that make trade-based promotion of

environmental policies and practices likely: First, their importers have a record of

promoting the adoption of environmental regulations by export partners in the

developing world; second, they use trade-based policy pressures to incentivize

good environmental performance by partners; third, they hold suf‌f‌icient

376 Journal of Environment & Development 26(4)