Johnson, J., G. Pecquet, Et Al. (2007), "potential Gains from Trade in Dirty Industries: Revisiting Lawrence Summers' Memo," Cato Journal, 27(3), 397.

Johnson, J., G. Pecquet, et al. (2007), "Potential Gains from Trade in Dirty Industries: Revisiting Lawrence Summers' Memo," Cato Journal, 27(3), 397.

Abstract:The article describes the negative effects of globalization or free trade on developing nations and environment. The continuous shift of pollution intensive production to poor countries effectively exports toxics to them as a result of which the richer countries benefit by reduction in disposal costs and health risks, while the poor countries benefit by increase in income and savings. The Authors mention about the continuous debate over trade of toxic wastes to developing countries in spite of Basel Convention, which bans exports of toxic wastes to developing countries as the main criticism of free trade and economic development policies. The authors criticize Summers arguments and explain the interrelation of comparative advantage with health, life expectancy and opportunity costs in detail through this article. The opportunity cost and benefit for a person in developed nation is totally different from a person in developing nation somewhere in Africa.

Strengths: The authors differentiate the opportunity costs for pollution among developing and developed nations which is practical and makes sense. I agree to Authors’ comments that for a person in developed nation has a higher opportunity cost in increase of pollution, as the developed nation reduces its risks by exporting industries with toxic wastes to developed nations, whereas for the citizens on developing nation have a lower opportunity cost in hazardous wastes since their priority is wealth over health. I agree to both the scenarios pointed out by the Authors, and the explanation given for these differentiation is convincing to me, the authors prove that poor and rich do not face the same risks of health.

Weaknesses: The article also introduces the concept of “compensated dumping”