Shifting of Pollution Loads to Informal Units in India: A Possible Escape Route for Compliance with WTO Standards

Abstract

This article tries to examine the environmental and social costs imposed on the Indian economy as a result of globalization. It is shown that in the world market, India has strong revealed comparative advantage (RCA) in a number of dirty products. Constant Market Share (CMS) analysis for these products suggests enhanced price competitiveness in the post-liberalization period. However, an estimation of total pollution content of India’s trade vector indicates that though the pollution content increased during early liberalization and globalization period, it has come down in the post-World Trade Organization (WTO) period. Whether this is an outcome of switching to cleaner technology to comply with the stricter environmental and social standards or merely a consequence of shifting pollution load from the formal to the informal sector is our research question.