Rethinking policy intervention for the transition towards competitive trade-led green growth

Abstract

A Neo-classical trade-led growth model, supported by rapid technological advancement and the WTO regime was instrumental to achieving higher growth and prosperity during the last few decades; however, it could not cope with new challenges such as environmental degradation, inequality, social disharmony, and poor quality of life. The adoption of a Green growth approach is gaining momentum to overcome these issues. Since two thirds of world production is traded, trade should also be competitive, inclusive and environmentally sustainable within a green growth regime. Through an extensive review of trade and competitiveness theories, human development, and environmental sustainability literature, a set of 'adaptive strategies' are explored that incorporate elements of competitiveness, inclusiveness, and sustainability in the trade sphere. A 'Green Box System Framework of Adaptive Strategies for trade-led green growth transition' has been developed which explains how those strategies may facilitate a trade-led green growth transition when catalysed by a number of policy instruments/incentives. The applicability of those strategies in a low-income economy has been tested in the Nepalese context with some executive interviews at both the policy and firm levels.