The economics of environmental degradation from pollution-intensive multinational enterprises in less developed countries

Journal Article · Sun Jun 01 04:00:00 EDT 1997 · International Journal of Energy-Environment-Economics

OSTI ID:479381

Grivoyannis, E C ^[1]

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1. Seton Hall Univ., South Orange, NJ (United States)

The economic productivity of ecological systems constitutes imperfectly known resources for many developing countries and, as a result, national incentives for their preservation are hampered. Scarcity of capital and foreign exchange, on the other hand, creates for these countries an economic pressure to reduce environmental quality standards in return for foreign exchange from pollution-intensive multinational enterprises. For a bargaining outcome to be considered successful, the host country`s marginal cost of environmental protection should be equal to the social scarcity cost of foreign exchange for capital accumulation. However, imperfections in the international capital markets and in he information processing of private and government institutions as well as government failure may upgrade the value of foreign exchange relative to environmental protection. As a result, many developing countries may prefer to have more direct investment gains derived from an inflow of foreign exchange by allowing pollution-intensive multinationals an excessive amount of pollution, than the strategically optimal one, if these enterprises are prepared to shift operations to their country. Strategic bargaining by pollution-intensive multinationals can turn the economic pressures of developing countries into an exploitable dependence. This paper investigates the socio-economic outcome from strategic bargaining opportunities between developing countries and pollution-intensive multinationals in an effort to provide a better understanding of what is negotiable in the presence of exploitable dependencies.

• OSTI ID: 479381
• Journal Information: International Journal of Energy-Environment-Economics, Journal Name: International Journal of Energy-Environment-Economics Journal Issue: 4 Vol. 4; ISSN 1054-853X; ISSN IJEEEJ
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
DEVELOPING COUNTRIES
ENVIRONMENTAL QUALITY
FOREIGN POLICY
INTERNATIONAL COOPERATION
SOCIO-ECONOMIC FACTORS