Trade liberalization and environment in Pacific island countries (FICs): is it a case of “two gains for one”?

Abstract

Trade liberalization policies pursued by the Pacific Forum Island Countries (FICs) have been further cemented as an appropriate strategy for economic growth through the recently adopted trade agreements. Proponents of trade liberalization also argue that free trade leads to improvements in environmental quality. According to the “environmental uznets curve” (EKC) hypothesis there would initially be some environmental degradation, but as income rises through free trade, demand for higher environmental quality would lead to improvements in the quality of the environment. It is suggested that FICs should have complementary environmental and social policies to ensure that the environment is sustainably managed and the poor are not left out in the new economic environment. Free trade amongst the FICs therefore is not a case of “two gains for one”. That is, we cannot expect both a rise in per capita income and environmental quality to be delivered simultaneously without the adoption of complementary environmental and social policies. The vulnerable environment of the FICs cannot wait for environmental quality based on the EKC hypothesis.

Citation

Chand Prasad, B. and Asafu‐Adjaye, J. (2003), "Trade liberalization and environment in Pacific island countries (FICs): is it a case of “two gains for one”?", International Journal of Social Economics, Vol. 30 No. 12, pp. 1288-1305. https://doi.org/10.1108/03068290310500670