Environmental issues for developing countries arising from liberalized trade in the mining industry

Abstract

This review analyses some of the environmental and economic implications of current trade policies and changes in the world trading system for mineral producers and consumers. A principal factor which determines environmental performance is whether firms have the resources and capabilities to undertake innovation. We therefore place particular emphasis on the anticipated effects of liberalized trade on innovation and competitiveness at the firm level. Evidence indicates that improvements in environmental management would be expected to occur irrespective of the country hosting the investment. Due to the opening investment climate and relatively large quantities of mineral reserves, we expect these effects to be positive for many mineral producing developing countries. One difficulty which may arise is whether policy measures to promote production efficiency and develop innovation in mining and mineral processing operations could be interpreted as protectionism. The creation of new lines of credit, to promote, but not subsidize, technological and organizational innovation, may be the best way forward for developing countries.