Technological change, trade and the environment

Abstract Trade policies and environmental policies have evolved largely independently, and until recently their interactions attracted little attention. There is much discussion of the institutional arrangements and economic instruments needed to embody environmental concerns in trade policy, but relatively little discussion of the role of technology. This paper describes the long-term, environmentally-motivated technological change involved in shifting from an “end-of-pipe” approach for capturing pollutants after they are generated to a focus on the prevention of environmental degradation. The new engineering field of Industrial Ecology promotes design and manufacturing practices that are based on an examination of the full life-cycle of a product in order to improve environmental performance. Industrial Ecology is spreading quickly in the industrialized countries, but its repercussions are transmitted widely through international trade. Plastics provide a good example of both the opportunities and the difficulties surrounding environmental protection, technological change, and trade. Concerns over solid waste in the rich countries may result in new market opportunities for biomass-based polymers, but the success of these products depends upon a complex set of factors, including very different alternative ways individual countries may choose to deal with solid waste. The implications for the developing countries are examined for the case of plastics, and more generally.