• Environmental impacts

Environmental impacts of trade liberalisation

This paper examines the impact of trade liberalisation on the environment in both the manufacturing and the agricultural sectors in Argentina. Based on previous research, the paper explores whether the significant acceleration of Argentine economic growth under trade liberalisation has brought environmental improvements, as argued by the advocates of trade and investment liberalisation, or whether, as maintained by many environmentalists, they have occurred at the expense of the environment.

Findings include:

• the experience with the introduction of no-till cultivation and RR soy in the agricultural sector in the Pampas shows that production expansion has not damaged the environment and has mostly benefited farmers rather than input suppliers, contrary to the assumptions of those who oppose this new technology
• it is important to keep in mind that the social and environmental impacts in other agricultural activities in Argentina, such as Bt corn and cotton, were less beneficial
• some progress was made in the diffusion of modern environmental management techniques to counteract the scale effect on the environment in manufacturing industry, however, this development has been limited to a handful of large and mostly foreign-owned enterprises.

The paper also offers a number of policy recommendations:

• it is important to keep countries open to international flows of technology and investment while acknowledging that imported inputs do not substitute for the process of development of indigenous capabilities
• it is important to learn and conduct more research on the impact of trade and foreign direct investment liberalisation and, at the same time, to design and implement adequate enterprise, environmental, and innovation policies, including the management and monitoring of agriculture biotechnologies
• government agencies and of the institutions need to be improved to better deal with the coordination and market failures that prevail in this field in general
• developing countries should push to encourage international cooperation for building adequate policies and institutions in the host countries to meet environmental requirements, to adopt environmentally friendly technologies, and to foster endogenous innovation capabilities.

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