Economic Integration and Environmentally Sustainable Development: the case of CAFTA-DR impact on firms

My interest in this topic comes from the controversy the US-Central American Free Trade Agreement (CAFTA-DR) generated in Costa Rica about the pros and cons of the treaty for the country. For the first time in Costa Rican history a national referendum was held in 2007 to decide whether or not to subscribe to CAFTA-DR. Despite several polls showing a majority against the treaty, in the end it passed. The controversy was not unique to Costa Rica. Citizens of El Salvador, Honduras, Nicaragua, Guatemala and the Dominican Republic held long-running public demonstrations against CAFTA-DR, but just as in Costa Rica, legislatures in those countries ultimately ratified and implemented CAFTA-DR by mid-2006.;Objectives. Throughout this dissertation the main objective is to investigate the impacts of the Central American Free Trade Agreement in the integrated region, in each member country and on business in general. The treaty is expected to impact not only the economy of the region but also the social and environmental structures of domestic and international businesses. This dissertation will focus on elucidating the links between trade, economic integration, environmental regulations, environmentally sustainable development and how they affect international businesses in the region. Each chapter of the dissertation tackles an aspect of the above mentioned links.;Part I: The first chapter focuses on discerning the difference between sustainable development and environmentally sustainable development and most importantly on distinguishing sustainability at a country level and at the firm level. The objective of this section is to determine "sustainability" of each CAFTA-DR member country and the sustainability of multinational enterprises operating in the region. Several recognized sustainability indicators analyzed within the context of the effects at the firm level.;Part II: The second chapter focuses on elucidating the link between trade openness, economic integration and environmental quality. The objective of this section is to determine the effect of foreign direct investment (FDI) and trade openness (mostly increased by signing and implementing CAFTA-DR) has had on environmental quality through studying the effect of Sulfur dioxide, Nitrous oxides and Carbon dioxide emissions. An econometric model is used in this section.;Part III: The third chapter focuses on elucidating the effect of new CAFTA-DR environmental provisions at the firm level, particularly on domestic firms. The objective of this section is to determine the effects voluntary mechanisms and self-regulation of firm with respect to environmental regulation. A case study of a multinational firm (the Intel Corporation Costa Rica) is presented.;Research Contribution. Part I: I have not found in the research literature sustainability or environmental assessment specific to the CAFTA-DR region. The contribution of this section would be the use of accepted mainstream sustainability indicators to capture the impacts of a free trade agreement that includes environmental provisions.;Part II: There is a vast literature on the relationship between trade, FDI, environmental regulation and pollution. However, specific studies about the links between trade openness, economic integration and environmental quality in the CAFTA-DR region are non-existent. Therefore, a study that focuses on this particular region and CAFTA-DR would provide a contribution to the field.;Part III: The specific mandates of CAFTA-DR and the impact on domestic firms has not be studied either. Therefore, it would be interesting to find out how domestic firms have been affected by the CAFTA-DR environmental provisions. In addition, an important contribution is to elucidate the impact of voluntary and self-regulatory environmental initiatives have on domestic and multinational firms.