Environmental Engineering Reference
In-Depth Information
Three other studies in Asia, summarized in Hettige et al. (1996), also found foreign
ownership,
rm-level environ-
mental performance. Huq and Wheeler (1993) examined fertilizer and pulping plants in
Bangladesh; Hartman et al. (1995) examined determinants of pollution abatement among
26 pulp and paper plants in Bangladesh, India, Indonesia and Thailand; and Pargal and
Wheeler (1996) conducted an econometric analysis of determinants of performance
among plants across a number of sectors in Indonesia.
Like the Mexican study, these studies in Asia found that the scale of the plant or
fi
nancing, or links to OECD markets to be insigni
fi
cant in
fi
rm
was positively associated with environmental performance - i.e. the bigger the better.
They also found that 'rapidly spreading multinational facilities are relatively clean'
because they employ newer technology (Hettige et al., 1996, p. 1901). The most impor-
tant factor, however, was not ownership (i.e. domestic versus foreign), but the newness of
the facilities: new plants, whether domestic or foreign owned, are likely to be cleaner
because of newer technology. In a surprising twist, a recent study of manufacturing plants
in Korea by Aden et al. (1999) found that domestic
fi
fi
rms apparently perform better than
foreign
rms. The variable examined was plant-level spending on pollution abatement.
The authors speculate that the reason that domestic
fi
rms spend more might stem from
the attempt by the unpopular Korean
chaebol
to shield themselves from public criticism.
All these studies suggest that, despite the lack of e
fi
ff
ective regulation, environmental
performance of many
rms is improving. Rather than pollution-intensive production
across the board, Hettige et al. (1996) conclude that, 'Despite weak or non-existent formal
regulation and enforcement, there are many clean plants in the developing countries of
South and Southeast Asia' (p. 1891). What accounts for this? While scale and technology
e
fi
ects are important, what emerges from these studies (as well as from the Mexican study)
as the most signi
ff
rm performance is community pressure.
The actual mechanisms by which communities pressure
fi
cant determinant of
fi
rms to clean up are not clearly
spelled out in these studies (with the exception of Korea, where communities have signed
formal agreements with companies). Instead, what the studies show is a high correlation
between the income and/or education level of a particular community and the overall level
of environmental performance by
fi
rms located in that community. This result is strong
in Indonesia and Thailand, in China (Afseh et al., 1996), and in South Asia. Apparently,
richer and more educated communities are able to bargain e
fi
ff
ectively with
fi
rms. Poorer
and less educated communities are not.
In addition to community pressure, the Mexican and Korean studies suggest that strong
regulation matters. Firms adjust their e
ort and their performance based on expectations
of enforcement, especially site inspection visits and sanctions. In Korea, regulators apply
an increasingly intrusive monitoring program and escalating sanctions depending on past
performance.
A study of MNCs in the chemical industry in Latin America found that US companies
played a leading role in di
ff
using the Responsible Care Program to domestic companies
in Mexico and Brazil (Garcia-Johnson, 2000). Developed in the early 1980s in Canada by
the chemical industry in response to the Bhopal disaster, the program aims to raise indus-
try self-regulation beyond mandatory government standards in the areas of environmen-
tal impact, employee health and safety, facility security and product stewardship.
8
By
2005, chemical industry associations in 45 countries had signed up to the Responsible
Care Program, including 17 in developing countries.
9
ff
