Environmental Engineering Reference
In-Depth Information
10
The impact of open trade and investment
regimes on environmental outcomes in East
Asia's capitalist developmental states
Michael T. Rock and David Angel
Introduction
The burgeoning literature on trade and the environment suggests that the impact of open-
ness to trade and investment on the environment depends on whether positive technique
e
ects of open-
ness. Copeland and Taylor (2003) suggest that they are, at least for SO
2
,while Managi
(2007) argues that these results do not hold for developing economies.
Our contribution to this literature takes a decidedly di
ff
ects are large enough to overcome the negative scale and composition e
ff
erent tack by demonstrating that
in the rapidly developing East Asian newly industrializing economies these technique e
ff
ects
depend on a development strategy and a set of institutions and incentives that encourage
local
ff
rms to invest in the hard slog of building their technological capabilities, including
their environmental capabilities. Our argument proceeds in three steps. The
fi
rst section
describes the evolution of the two major institutional innovations in this group of
economies - the capitalist developmental state, which emphasizes technological learning
through the export of manufactures, and policy integration, or the integration of environ-
mental policies and institutions with the institutions of industrial policy. Our aim is to
demonstrate how capitalist developmental states in this region harnessed technological
learning around the export of manufactures and the practice of policy integration to reduce
environmental intensities expressed as environmental impact per unit of output. The
second section demonstrates, through industry and
fi
fi
rm-level examples, how this particu-
lar con
fi
guration rewarded
fi
rms investing in technological learning to reap the positive
technique e
ff
ects associated with globalization. The
fi
nal section concludes our argument.
The capitalist developmental state and policy integration
Since the 1960s, the economies in rapidly developing East Asia have been going through
a historically unprecedented process of high-speed industrial technological catch-up with
the West. This process, which began in Japan (1981), spread
rst to Korea (Amsden,1989),
Taiwan Province of China (Wade, 1990), Hong Kong, China (Haggard, 1990) and
Singapore (Hu
fi
, 1999) and subsequently to Indonesia (Hill, 1996; Rock, 2003; 1999),
Malaysia (Jomo, 1986) and Thailand (Pasuk and Baker, 1995; Rock, 1994). While there
are signi
ff
fi
cant di
ff
erences among this group of rapidly developing economies, including
di
erences in their ability to upgrade their technological capabilities, their development
strategies have been led by what Johnson (1982) refers to as capitalist developmental
states.
East Asia's capitalist developmental states possess a number of important institutional
innovations that distinguish them from the rest of the developing world. To begin with,
governing elites committed to development provided long-term political stability
ff
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