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GTAP Resource #4137

"Trade liberalization and the demand for natural resources"
by Decreux, Yvan and Lionel Fontagné

Free trade has been promoted by economists and multilateral institutions as allowing a better allocation of resources across economic sectors within countries and at world level. While the main concern of policy makers trying to tailor trade agreements was to find an appropriate balance of concessions between negotiating parties and to avoid proposals that would place governments in difficult position within their respective countries.

Around year 2008 however, besides these efficiency rationale and political economy considerations, new concerns emerged into the debate. While a positive outcome of multilateral trade liberalisation was a possible increase in world food prices favouring exporters in the developing world, the 2008 food crisis raised the concern that high food prices may actually be the problem. At the same moment, oil prices were reaching record levels, after 6 years of rapid growth, while climate change and the role of greenhouse gases in its generation gathered only very few sceptics.

Food prices and environmental issues were both related to the scarcity of natural resources in the context of the emergence and industrialisation of large countries like China and India in particular.

Free trade and trade liberalisation has often been pointed as a possible risk to increase the demand for transport and thus energy demand. On the other hand, free trade is praised for permitting a more efficient use of capital and labour. One could argue that free trade can also probably allow a more efficient use of natural resources as well. For instance, high-technology agriculture is often more energy-intensive than low-technology agriculture, that is based mostly on labour. On the contrary, high-technology industry is often less energy-intensive in advanced countries than it is in less-developed countries. One of the outcomes of most assessments of the Doha Development Agenda (DDA) was that developing countries would increase their production of agricult...

Resource Details (Export Citation) GTAP Keywords
Category: 2013 Conference Paper
Status: Published
By/In: Presented at the 16th Annual Conference on Global Economic Analysis, Shanghai, China
Date: 2013
Created: Decreux, Y. (4/14/2013)
Updated: Decreux, Y. (6/12/2013)
Visits: 1,629
- Trade and the environment
- Multilateral trade negotiations

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