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DR-CAFTA and the environment, Volume 1
Author:Cunha, Barbara ; Mani, Muthukumara; Country:Dominican Republic; Central America;
Date Stored:2011/10/04Document Date:2011/10/01
Document Type:Policy Research Working PaperSubTopics:Environmental Economics & Policies; Brown Issues and Health; Water and Industry; Emerging Markets; Economic Theory & Research
Language:EnglishMajor Sector:Industry and trade
Rel. Proj ID:6C-Cafta-Dr: The Day After -- -- P114362;Region:Latin America & Caribbean
Report Number:WPS5826Sub Sectors:Other domestic and international trade
Collection Title:Policy Research working paper ; no. WPS 5826TF No/Name:TF093378-TRTA
Volume No:1  

Summary: The Dominican Republic-Central American Free Trade Agreement with the United States aims to create a free trade zone for economic development. The Agreement is expected to intensify commerce and investment among the participating countries. This paper analyzes the changes in the production and trading patterns in 2-digit manufacturing sectors with the goal of understanding the short-term environmental implications of the Dominican Republic-Central American Free Trade Agreement. More specifically, the paper addresses the questions: Did pollution increase in the period after the Agreement negotiations? Did trade and production shift toward pollution intensive factors? The results suggest an increase in pollution emissions in the post-negotiations period. The increase in emissions is mainly attributable to scale effects. Composition effects are small and in some cases (including Nicaragua and Honduras) favoring cleaner industries and partially compensating the pollution gains from output and export growth.

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