Theodore Panayotou CID Working Paper No. 53 July 2000 Environment and Development Paper No.1
Copyright 2000 Theodore Panayotou and the President and Fellows of Harvard College
Center for International Development at Harvard University
Globalization and Environment Theodore Panayotou Abstract Economic globalization impacts the environment and sustainable development in a wide variety of ways and through a multitude of channels. The purpose of this paper is (a) to identify the key links between globalization and environment; (b) to identify the major issues addressed in multilateral economic agreements in trade and finance that affect environmental sustainability; and (c) to review priority policy issues affecting the environment in multilateral economic agreements and environment, thus identifying incentives implicit in trade and investment policy measures that affect environmental sustainability. The author categorizes these issues under the primary areas of globalization: trade liberalization, investment and finance, and technology diffusion, the latter including intellectual property rights. In the case of the trade-environment interface, the paper examines the impact of both elements, and the causal relationship between them. It also pays special attention to multilateral environmental agreements and their potential effects on trade. An integrative section on the effects of globalization and environmental policy and performance leads to domestic and international priority policy issues and recommendations. The author concludes that globalization brings with it potentially large benefits as well as risks. The challenge is to manage the process of globalization in such a way that it promotes environmental sustainability and equitable human development. In short, the more integrated environmental and trade policies are, the more sustainable economic growth will be and the more globalization can be harnessed for the benefit of the environment. Keywords: Environment, Globalization, International Trade JEL Classification Codes: F18, O13 ______________________________________________________________________________ Theodore Panayotou is the Director of the Program on Environment and Sustainable Development at the Center for International Development. His recent research has focused on the intersection between economic growth and environmental sustainability. ______________________________________________________________________________ Background paper for the Human Development Report 1999 United Nations Development Program (UNDP).
Globalization and Environment
Theodore Panayotou Globalization has been the defining trend in the closing decade of the 20th century and the dawn of new millenium heralding a new era of interaction among nations, economies and people. Globalization is an on-going process of global integration that encompasses (i) economic integration through trade, investment and capital flows; (ii) political interaction; (iii) information and information technology and (iv) culture. While all dimensions of globalization affect the natural environment and through it human development, for the purposes of tracing the main lines between globalization and environment we will focus on the economic dimensions of trade, investment and capital flows. An unprecedented flow of capital, technology, goods and services crosses national borders daily. Nearly 20 billion US dollars in capital flows around the world each day. Economic globalization impacts the environment and sustainable development in a variety of ways and through a multitude of channels. Globalization contributes to economic growth and thereby affects the environment in many of the same ways that economic growth does: adversely in some stages of development, favorably at others. Globalization accelerates structural change, thereby altering the industrial structure of countries and hence resource use...