Does Trade Liberalization Increase High-Polluting Industries?: An Empirical Study of Thailand

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It is widely known that trade liberalization has a positive effect on economic growth of Thailand. However, it is debatable whether trade liberalization has increased the production level of pollution-intensive products in Thailand. This study examined whether the impact of trade liberalization has resulted in higher production in high polluting industries than lower polluting industries. The study used panel data from 28 industry sectors during the period of 1991 to 2014 and selected the most appropriate specification between fixed effects and random effects. The result showed that the combination effects of trade liberalization and applied tariff reduction (62.36%), will increase the production value of high polluting industries by 84.81%. Therefore, Thai government should demonstrate higher level of industrial emissions regulations and should encourage the production of environmentally-friendly goods and services in order to achieve sustainable development in Thailand.


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