Environmental policies in developing countries

This paper examines the welfare implications of the current environmental policies in developing countries, especially in reference to the importation of polluting industries from developed countries. The major finding of this study is that the environmental policies currently employed by most developing countries involve substantial losses of economic welfare. It is also pointed out that the straightforward application of the Pigouvian tax rule is not advisable since there usually exist other distortions than the externalities in question and the elimination of them all is practically an impossible task.