Current trade trends in Latin America and the growth possibilities for greening the economy

Abstract

Latin American countries are concentrating their exports in natural resources or industrial goods characterized by relatively high degree of pollution in their production processes. However, this paper shows that an alternative pattern of economic growth is possible: higher expansion of clean economic activities, “greening the economy”, would bring better effects to employment and income generation. This is proved by an input-output model that compares alternative economic growth options. The results show that spurious growth based on natural resource depletion or degradation bring worse results than alternative economic options that concentrate output in higher value added products that are less harmful to the environment: employment and wage creation are higher in the scenarios where the dependence on natural resources depletion and degradation are reduced. More pollution and resource depletion would lead to less, rather than more, inclusive growth, the opposite result expected from the “Environmental Kuznets Curve”.