Pakistan Institute of Development Economics



Environmental Effects of Trade Liberalisation: A Case Study of Pakistan

Within today’s global economy countries now trade more intensively and frequently than in the past. Trade has become an increasingly important global economic activity, with annual trade volumes increasing sixteen fold over the last fifty years and the ratio of world exports to Gross Domestic Product (GDP) now approaching twenty percent. With this recent acceleration of global trade, countries throughout the world have benefited from more investment, industrial development, and employment and income growth. Other positive effects include increased mobility of capital, increased ease of movement of goods and services (and information) across national borders as well as the diffusion of global norms and values, the spread of democracy and international environmental and human rights agreements. Critics of trade liberalisation argue that these much-acclaimed advantages of trade liberalisation (and globalisation) often underrate the impact of globalisation on widening the economic gap between the North and the South. Over the years, attention has been given to the advantages of trade liberalisation and globalisation to the detriment of the disadvantages. The major disadvantage that is always swept under the rug is the environmental problem. Recently, however, there has been an increasing concern over the potential negative impacts of trade liberalisation, particularly on the environmental and natural resources of developing countries.