Environmental issues have been brought to the forefront as a result of strong economic growth over the last half century.
Anne O Krueger, professor of international economics at Johns Hopkins University in Washington D.C. says economies such as China and India have resulted in “greater urgency” pertaining to the environment than ever before.
“No one can defend the view that emerging markets’ growth should be severly restrained because of environmental concerns,” the professor said in a paper presented to the Reserve Bank of Australia’s 50th anniversary in Sydney earlier this week.
The challenge will be to find a regime under which the environment can be protected for the “public good” while balancing the competing need to allow emerging countries to maintain their growth rates.
Around the world, consumers in the industrialised, advanced economies have been wooed by cheaper imported manufacture goods from countries like China and India, often to the detriment of local industries. Home grown agricultural industries have also suffered.
“The entry of newcomers always engenders protectionist pressures, as was seen vis-a-vis Japan in the 1980’s,” said Professor Krueger.
“With the rapid ascent of India, and even more of China, the temptation to protectionist measures in the “old countries must be recognised.”
Professor Krueger said a well functioning World Trade Organization is the best bulwark against protectionist pressures, although “although achieving it will be difficult.”