If the production of a good creates a negative externality, exports can be damaging to a nation.

Question

Quizplus · Accepted Answer

If a nation is producing a good that creates a negative externality, such as pollution, then exporting that good can lead to the spread of the externality to other countries. This can have negative impacts on the environment and the health of people in those countries, potentially damaging the reputation of the exporting nation and leading to trade restrictions.

If the Production of a Good Creates a Negative Externality