Strategic Bilateral Environmental Aid and Trans-Border Pollution - Term Paper Example

The paper "Strategic Bilateral Environmental Aid and Trans-Border Pollution" is a brilliant example of a term paper on macro and microeconomics. Trans-border pollution poses a serious challenge to environmental cooperation among sovereign states. Due to a heterogeneous degree of environmental regulations among countries, only a few binding environmental conventions have remained successful throughout the years. Property rights for environmental goods are hardly well defined across borders; having the impact of discouraging foreign commercial licensing of environmental technology. In the absence of credible inter-government institutional arrangements that facilitate the efficient transfer of environmental technology to polluting countries, free-riding incentives can prevail and trans-border pollution is likely to continue unabated in the immediate future.

Unlike binding multilateral environmental conventions or the commercial licensing of environmental production technologies, intergovernmental environmental bargaining to reduce trans-border pollution has remained active in the recent past. The bargaining outcomes, if implemented successfully, are certainly related to the Pareto principle for improving environmental aid.

Recently, a variety of bilateral environmental Official Development Assistant (ODA) grants, which involve clean technology and know-how transfer, have been offered by a number of developed countries to assist in developing polluting countries (Chambers and Jensen, 2002; Hicks et al., 2008). As such, more than 100 billion dollars of environmental aid has been committed during the first decade of this century.

However, as argued in a number of studies, different types of aid may induce economic growth and enhance the relative trade competitiveness of the recipient countries (i.e. Cali and Te Velde, 2011; Kang et al., 2010; Martinez-Zarzoso et al., 2010; Munemo et al., 2007). In addition, there is strong evidence in the literature that suggests that the bilateral aid flows heavily depend on the donor’s self-interest; such as the promotion of the donor’s exports to aid recipient countries (i.e. Silva and Nelson 2012; Martinez-Zarzoso et al. 2009; Nowak-Lehmann et al. 2009; Johansson and Pettersson, 2009).