2013-01-08 Economic Development and the Environment.docx

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Political Science
Political Science 2137
Cameron Harrington

Economic Development and the Environment: The World Bank, IMF, WTO, and the Third Word January 8, 2013 The Environment and Global Political Economy  1970s-today: increase in volume+value of: 1. Trade 2. Investment 3. Finance What are the effects of this on the environment? It depends on whom you ask: 1. Supporters 2. Critics 3. Middle-ground -Global economic activity -it’s been about 30 years since this rapid global expansion -in the past 3 decades, this rapid expansion has increased in trade, investment, and finance = exemplify economic globalization -this expansion has created huge debate on merits and demerits of globalization and how it affects the environment -supporter of globalization from an environmental perspective: -globalization through communication and technologies through global awareness; helps us understand the issue -global pressure on government – more environmental consciousness -make environmental choices in terms of trading -new actors: Greenpeace (NGO – advocacy): through globalization, it leveraged change -technology itself: through trade, investment and finance, we can increase efficiencies and advance technology to better able to manage control environmental problems -increases legitimate authority to manage international (e.g. World Trade Organization) -critics/detractors -transnational corporations; free trade laws important for increasing globalization, communication – attract money on environmental issues; race-to-the-bottom (companies will be able to identify where regulations are most lax around the world and can move productions there to cut costs and overhead); countries have to compete with one another at the lowest denominator (which country can erase the most regulations to entice corporations) -globalization has created a very thin skeletal regulatory regime around the world when it comes to the environment that has negative impacts -Middle-ground -there are some very significant benefits to globalization (we can see the increase in wealth being spread – not evenly – but it is increasing wealth) -there is a general trend of development around the world – help environment protection -we have to be careful that it will not come to real ethics in environmental protection -try to harness the good and mitigate the bad = difficult to do that -sustainable development paradigm: basically lies in the middle-ground -green theorists: are definitely critics -mainstream view of sustainable development: see it middle-ground -sees its benefits and negative impact -when it comes to environment, the gulf is quite pronounced -gulf can paralyze the actions when it comes to environmental agreements and make it difficult to make them, difficult to keep them going, make them effective -the good option might be the middle ground, but it has its challenges -Middle-ground problems: does it put us in status-quo; are we not doing enough? Globalization, Economic Growth, The Environment  Environmental impacts of economic integration begins in earnest in early 1990s  NAFTA, Rio Summit  Two sides emerge: o Environmental economists (Pro-globalization) o Ecological economists (Critical of globalization) -it has been 30 years since globalization started to increase at a rapid rate -debate over economic integration and its environmental impacts came at around 1990s -pivotal developments: -1. NAFTA: North American Free TradeAgreement -signed by USA, Canada, and Mexico in 1994 -one of the central drivers of debate: what are the environmental impacts of this agreement? -this debate brought many new concerns over environment -what are the environmental implications of economic integration? -this was one of the watershed moment: the environment became a focal point when it comes to the economy -2. Rio Summit of 1992 -biggest environmental and international meeting ever held -most heads of states met up to discuss how to better manage the environment -all of this occurring in an age of rapid integration of this global economy – right after the collapse of Soviet Union and end of Cold War, it opened this new world order -environment is central to these debates -two basic schools of thought emerge at this time: -2 sides -1. pro side: supportive side of globalization and the environment -environmental economists see economic growth as potentially positive force in the environment -overriding logic for them is that economic markets are the most efficient tools in allocating resources -they’re the most efficient tools for correcting environmental problems -faith in the market -market incentivizes good environmental behaviour -2. con side: ecological economists -they are drawing not on neoclassical economics but are drawing on a wider array of disciplines -look at physics, ecology, sociology, science, political science -different from mainstream, pro-globalization -economic growth has negative impact on environment on balance -some are highly critical, some are less so in terms of how they view the markets and impact on environment -on the whole, they don’t have much faith that free trade will be beneficial to the environment Environmental Economists  Draw from neoclassical economics  Rely upon concept of comparative advantage  Trading partners will gain exporting goods for which they have the least opportunity cost  By focusing on producing what you are comparatively good at, the overall welfare of all trading partners will increase - David Ricardo, father of neoclassical economics -thrust of the argument is from very old ideas -old ideas are classical, economic models -classic ideas about trade and markets -they rely heavily upon on this concept called comparative advantage -comparative advantage was theorized by David Ricardo in early 1800s -this theory is arguing that when trading partners export goods that have least opportunity cost, they are going to gain from international trade -even if they don’t have absolute advantage over another country, they can benefit by focusing their attention on developing goods and services that are cheapest for them to do so -implication: if all countries focus on producing what they are comparatively best at producing and trade with one another, the overall welfare for everyone will rise -implications are massive -all countries can benefit from free trade and it’s better for all countries to trade with one another based on this theory of comparative advantage -international trade, not just domestic trade, but free international markets is the best driver for economic growth wealth, prosperity (all things we seem to desire) -today, faith in neoclassical economics is really high -mainstream of all economics; international trade is good, international investment and finance are pivotal in growth and the environment Environmental Economists  Economic growth provides the financial resources to manage the environment.  How does growth lead to a cleaner future? Kuznet’s Curve is telling: -just because economy can grow through comparative advantage and trade = why does it say environment is better off? -if we have global economic growth, it provides financial resources that are necessary in managing environment -how does steady economic growth benefit environment? -most environmental economists say the answer is the Kuznet’s Curve -Kuznet’s Curve: in the beginning of development (or extended economic growth), you are going to have environmental damage that’s inevitable -in the short term, economic growth brings environmental degradation -this is occurring because of a variety of things, including inefficiencies, bad policies, insufficient funds, weak government/weak state capacity, little experience, low political and social will to protect environment, etc. -this is when states are industrializing -in the long run, it’s a different scenario; all states eventually reach tipping point -as a country develops and industrializes, it will reach a point where it’s going be able to allocate more funds, more expertise, more attention to combatting environmental problems -when there’s high inefficiencies, low social wills in tackling environmental problems, you will have growth problems -as it gets to the point where it’s GDP is between $5000-8000 income per individual: you will have link between environmental degradation and economic development that sort of decouples -eventually, societal pressure increases to combat environmental problems, state capacity increases to raise environmental standards, pollution dropping = better managing of environment -classic case: Japan saw Kuznet’s curve unfold -implication: growth at first generates environmental harm, but in long run, it brings environmental accruements -countries at the very low end of scale (in terms of GDP), you’ll see biggest environmental degradation -reasons why economic growth and development can decrease environmental degradation -states might have better ways to combat environmental degradation -money to educate people; education improving -as corporations benefit greatly from short term, they will realize long term efficiencies and invest in technologies that will produce long-term gain -it all comes to state capacity and state willingness to act upon environmental problems -another aspect: role of people themselves in society; with greater wealth being distributed, people start to demand more and have more influence and power – might call for better environmental standards in a way to improve their lives -no longer about survival; comes down to being able to create better life, better living, and protecting the environment -in the short run, we will likely have environmental degradation but over long run, it will decrease -the underlying economic logic: economic growth is good for environment; this is what’s being offered from the mainstream Ecological Economists • Critics have challenged the rosy predictions of environmental economists • Continued inequality contributes to environmental degradation o Over-extraction of natural resources o “Throughputs” o Increased levels of waste o Northern ecological shadows -The Shadows of Consumption: Consequences for the Global Environment by Paul Dauvergne  This book argues that people are literally dying of consumption -ecological economists say that the linkages between economic growth and environmental degradation are not nearly as straightforward and clear-cut as Kuznet’s thinks it shows -raises questions about impact of inequality – how inequality related to economic growth actually harms environment -economic globalization doesn’t occur uniformally around the world -it distributes unevenly and unequally with benefits of international trade -economic growth shows full-stop on environmental degradation – there is no long run when it leads to better managing of environment -always short-run scenario in this point of view -according to this perspective, when we talk about economic theory and logic, we lose sight of the material aspect of economic activity -economic activity requires materials to occur -natural resources must be extracted for inputs and production process and for consumption -when we consume, we generate waste -”Throughputs”physical dimension of consumption and production -physical component of economic growth -from this ecological perspective: Earth only has finite number of resources for us to draw -finite amount of throughputs; no infinite amount -there has to be limits to growth -all of that is a direct counter to this classical economic point of view because it believes that there are limits whereas environmental economists say resources we need to develop are in abundance (we have enough resources to draw and continue to support economic growth) – contrast to ecological economists -some say we already passed the tipping point (in terms of sustainably developing – we are already past the stable limits) -further promotion of globalization and globalizing economic growth, replicating western economic growth is unsustainable point of view - contributes to further depletion of natural resources, further pollution, increase waste, and increase inequality -economic globalization increases inequality -even as we see the world economy coming more integrated over the past few decades, inequality has become more pronounced -this has negative environmental incomes – extremes poverty and wealth are bad for environment -we have overconsumption in some areas (industrial north and west) – we have huge usages of resources, increase level of waste -on the other side: we have extreme pockets of poverty, which leads to resource depletion, to add economic policy, bad/no environmental policy -this type of inequality can have really negative environmental effects “In a closed space with finite resources the underconsumption of one party is the necessary condition for the overconsumption of the other party…the rising tide, before lifting all boats, is likely to burst through the banks.” Wolfgang Sachs, 1999 -A worker in Guiyu, China extracting e-waste from a local electronics dump -quote: there’s always someone losing out in the economy -there’s always a need for someone to take the fall in order for the other states to prosper -we are not going to lower our quality of life to solve someone else’s, so there’s nothing we can do -unequal balance -affects both society and negative environmental impact -rising tide lifts all boats: spread economic wealth around the world and eventually everyone will pay(?) -it will overflow; we will have a huge economic catastrophe and it is untenable vision in the long run -in this globalized world economy, a large part of the problem is huge pockets of inequality; has big environmental impacts -impacts tend to be felt more so in world’s poorest countries -there are ecological shadows that the north casts upon the rest of the world -the north and west assumption: casts shadow on poor countries that have to produce goods for export -poor countries experience worse cases of pollution and conditions of environment and rich benefit the most from good environment and economic wealth -rich countries export waste to poor countries -at the same time, developing countries have little choice but to accept that in terms of economic terms VIDEO: 60 MINUTES THE WASTELANDS -e-waste -lead, mercury, chlorides, etc. = contribute to kidney disease, cancers -fastest growing component worldwide -throw over 100 million cell phones a year in US -people have “newer is better” thinking = new cameras, laptops, cell phones -wasteful products are shipped to foreign countries -against Hong Kong laws, Chinese laws, and US laws to ship harmful CRTs from US to Hong Kong -highly illegal; underground -pollution has ruined Guiyu -7 out of 10 kids have too much lead in their blood -more likely to have cancer in the town st -21 century toxics managed in poor environment -women pregnancy = more likely to end up with miscarriage -most polluted town; water very toxic -ash river from burning -smuggling and illegal -send e-waste overseas because it’s cheaper there -recycling has such a huge positive stigma – but people don’t know the process of actually recycling (takes a lot of resources and energy to actually recycle) -people use “green” name to profit – greenwashing -helps to create this open network where trade can be made for consumption and production -concept of externalityyou hand your computer to someone and think you did a good job, but you don’t know the material impact around the world -turnover of electronics: life of 3-5 years -Basel Convention -international agreement that limits, prohibits, and restricts international shipping of hazardous waste -172 countries signed, 169 ratified, Haiti, US, andAfghanistan have not signed it -worldwide agreement that helps prevent this from happening AMiddle Ground?  Globalization may lead to environmental harm, but it is not a given.  Some direct benefits  Targeted policy intervention necessary. -middle-ground perspective recognizes that globalization directly led to environmental politics -transport hazardous wastes around world, creation of e-waste dumps, proliferations of endangered species, proliferation of unsustainable timber practices -from middle ground perspective, it is all important but can obscure a larger point of view; these cases are isolated; prevalent but don’t take precedence -globalization does have some benefits for environment – can lead to good practices -roads can reduce poverty and encourage cleaner production -what is needed then is specific policies and specific targeted interventions that addresses specific cases of environmental harm and try to encourage environmental benefits from economic growth(?) -idea is not to not to shut down economic; but address specific instances where it does cause environmental problems and try to foster more positive impact -alternative energy seen as a way of not just encouraging economic growth but also a way of mitigating some environmental problems (e.g. fossil fuels) -globalization can engender both economic and environmental point of view International Trade • World trade has increased enormously: o 1948: $58 million o 2007: $12 trillion • International trade is organized and governed by the World Trade Organization (WTO) o Arose in 1995 as replacement to GATT o Ensures trade flows smoothly, freely, legally. o Main purpose is to provide assurance to producers and consumers -international trade of goods and services have increased hugely over past 50 years -world trade encompass 25% of GDP in 1960s and in 2007, it comprises 87% -world trade expanded from $58 million in 1948 to $12 trillion in
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