Part of the Problem? The Eurasian Economic Union and Environmental Challenges in the Former Soviet Union

ABSTRACT

While there is a sizable body of evidence linking greater economic freedom to better environmental outcomes, there is an ambiguous relationship of trade to the environment. What occurs when trade expands among countries that already have shown that the environment is not a priority? Such an example comes from real life with the Eurasian Economic Union (EaEU), a collection of autocracies that have pursued integration but without any extensive, market-based liberalization. This paper examines the role of the EaEU in increasing trade among its member states and shows that the EaEU did indeed lead to more environmentally unfriendly production.

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1. An additional fact in support of this thesis is that autocracies tend to have larger, state-owned firms, which have little incentive to become greener even as they internationalize (Clegg, Voss, and Tardios 2018).

2. The issue of trade alone in the EaEU has been amply explored elsewhere; see for example Tarr (2016), Vinokurov (2017), or Knobel et al. (2019).

3. It is debatable whether Belarus was truly a “winner” in the Customs Union, but by the metrics of trade—and arrayed against the aims of the EaEU, namely for greater regional integration—Belarus has come out far ahead of other EaEU countries.

4. Health NTBs are used by governments across the world to protect their citizens but also can be used as a form of protectionism. Technical barriers, on the other hand, have been shown to dampen trade (Disdier, Fontagné, and Mimouni 2008) and are often used first as a form of protectionism, especially in agriculture, and then only secondarily as a way to protect the citizenry (Li and Beghin 2012).

5. Calculations done on data from the Hartwell and Coursey (2015) database.

6. Available at http://www.eurasiancommission.org/en/act/integr_i_makroec/Documents/%D0%A6%D0%A3%D0%A0%20_Eng.pdf.

7. The reality is, over such a short time span, we cannot observe changes in environmental quality and attribute them solely to policies, as environmental quality itself is a longer-term phenomenon and may not have moved substantially in five or ten years. It is for this reason that we look at the production processes which, taken cumulatively, would equate to a cleaner or a less clean environment.

8. Additional regressions were run with various permutations of NOx, including NOx total emissions, NOx per capita, and NOx per capita intensity. However, the relatively shorter time span of the data series and the model itself was problematic and highly unstable. Results available on request, but a more detailed and specific model for NOx emissions is apparently called for.

9. Additional measures of technology were problematic in this set-up: for example, data on R&D expenditures had substantial gaps for EaEU countries and reduced the number of observations substantially, while adding an additional issue of collinearity (being highly correlated with income). Utilizing R&D data would have thus required taking out the Kuznets Curve specification.

10. Thanks to an anonymous referee for suggesting this point.