Resource information
The Dominican Republic-Central American
Free Trade Agreement with the United States aims to create a
free trade zone for economic development. The Agreement is
expected to intensify commerce and investment among the
participating countries. This paper analyzes the changes in
the production and trading patterns in 2-digit manufacturing
sectors with the goal of understanding the short-term
environmental implications of the Dominican Republic-Central
American Free Trade Agreement. More specifically, the paper
addresses the questions: Did pollution increase in the
period after the Agreement negotiations? Did trade and
production shift toward pollution intensive factors? The
results suggest an increase in pollution emissions in the
post-negotiations period. The increase in emissions is
mainly attributable to scale effects. Composition effects
are small and in some cases (including Nicaragua and
Honduras) favoring cleaner industries and partially
compensating the pollution gains from output and export growth.
