Environmental Impact of India's Trade Liberalization
42 Pages Posted: 10 Aug 2004
Date Written: June 2004
India's liberalization program of 1991 reduced trade barriers and removed investment restrictions across industries. Using industry level dataset aggregated across all manufacturing industries, we compare the pre- and post-liberalization periods to examine if India's domestic production and exports showed a greater increase in dirty industries relative to cleaner ones. We also examine whether there has been a greater inflow of FDI into pollution-intensive sectors in the post-liberalization period. Our findings indicate that exports and FDI grew in the more polluting sectors relative to the less polluting sectors in the post-liberalization period.
Keywords: Environment, pollution, trade liberalization, India
JEL Classification: F14, F18, F21, O53, O24, Q56
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