The Environmental Implication of Globalisation - Coursework Example

The Environmental Implication of Globalisation The impact of globalisation on the environment is controversial. Critics claim that intensified global trade as well as foreign direct investment (FDI) force national governments to cut down the costs of production within their control by avoiding endorsing or implementing laws to safeguard the environment. Even though governments of developing countries have the objective to safeguard the environment, they could lack the necessary financial and technological resources to successfully implement environmental regulations.1 It is commonly claimed that multinational enterprises (MNEs) can profit substantially from the consequent cross-country variations in environmental regulations by transferring the capacity of production to those nations most agreeable to make use of loose environmental policies as an encouragement for investment. Confronted with the possibility of an industrial flight, the debate goes on, countries are compelled to join a ‘race to the bottom’ and develop into ‘pollution havens’ or compromise high incidences of unemployment and the attrition of their tax base.2 In a sense then, globalisation weakens the ability of the government to safeguard the environment through corporate behaviour regulation. Conversely, advocates of globalisation argue that lower trade barriers and FDI motivate corporations to move environmental technologies as well as management systems from nation-states with more stringent environmental policies to developing nations, which cannot manage to acquire environmental technologies and capacities. The failure of the government to safeguard the environment, it is proposed in this assumption, could also be improved through self-regulation of firms’ environmental conduct in developing nations.3 Self-regulation “refers to a firm’s adoption of environmental performance standards or environmental management systems (EMS) beyond the requirements of governmental regulations.”4 Globalisation has the capability to boost pressures in self-regulation in various ways. Primarily, globalisation raises the investment of MNEs in developing nations wherein their subsidiaries can self-regulate their own environmental conduct more than that of the capacity of local firms.5 Moreover, MNEs can move their more sophisticated environmental technologies as well as their management systems designed to adjust to the stricter regulations in developed nations to their subsidiaries. Also, MNEs confront demands from interest groups to perk up their international environmental conduct. Furthermore, globalisation could be valuable in the self-regulation of environmental performance by local firms in developing nation. According to Dunning (1993), “MNEs are changing from foreign direct investors to multinational operators of global networks of suppliers”.6 Subsidiaries of MNE in developing nations could demand local providers to self-regulate environmental conduct. Lastly, globalisation could boost exports from developing to highly industrialised nations wherein customers could draw on environmental conduct as a ‘supplier-selection’ standard7, which as well pressures local firms in developing nations to start self-regulating. I. The Environment and Globalisation Globalisation has intensified because of the lowering of trade barriers and FDI. Intensifying globalisation generates concerns regarding environmental effects since the present regulatory structure for the protection of the environment is ineffective in the company of globalisation. Environmental regulations vary from country to country for the reason that they are mainly developed and enforced by nation states. Within an international economy with cross-country variations in environmental standards, countries with lax environmental policies could develop into production havens for industries that are pollution intensive.8 Furthermore, MNEs can take advantage of these so-called cross-country variations by transferring pollution-intensive processes in countries that have low environmental regulations. Hence we could witness industrial flight from countries with strict environmental regulations to those with loose environmental policies resulting into the escalation of pollution at the global level. Environmental processes of firms in response to country-definite regulatory conditions have been given increasing scholarly attention. Environmental processes rely upon the assumed economic advantage of adjusting to requirements in the home market, against requirements in key foreign markets. There are scholars who claim that MNEs profit from stricter environmental regulations in their home market for the reason that such requirements encourage them to take on advanced environmental management practices and technologies, which then enhance the global competitiveness of the MNEs once environmental standards are made more stringent in other countries.9 Explanations for cross-country variations in environmental standards comprise variations in the local appraisal of environmental value. Appraisal differences arise from variations in countries’ capabilities to endure, reduce, take in, or disregard pollution, and also from variations in economic and environmental concerns.10 Nevertheless, even though prescribed environmental standards are similar across countries, actual regulations could vary as a consequence of variations in countries’ capabilities to enforce, monitor and implement regulations. Several developing nations have no equipment or technology for environmental measurements or skilled enforcement staff and put up with fraudulent overseers. Under these circumstances, firms could predict their costs related with detection of infringements and payments of fines to be lower than acquiescence costs, leading into low acquiescence rates with prescribed standards.11 Globalisation consents firms to benefit from variations between local environmental standards. The pollution-haven assumption proposes that lowering barriers of trade encourage pollution-exhaustive industries to transfer to countries with lax environmental standards. Countries with loose regulations become production havens for pollution-exhaustive products and export them to different countries. Empirical evidence for the pollution-haven assumption is shaky. Studies have commonly assumed that the costs of protecting the environment are not a major determinant of the trade behaviour. Merely a few investigations have discovered the predicted detrimental impact of inflexibility of environmental standards or costs of environmental protection on exports.12 Likewise, the industrial-flight assumption indicates that MNEs take advantage of variations in environmental standards by transferring polluting activities in countries that have lowest standards or regulation. Even so, majority of empirical research has failed to see escalations in internal FDI of industries that are pollution-exhaustive in low-regulation countries.13 II. Other Impact of Globalisation on the Environment Several studies have reported a decrease in genetic diversity in the area of agriculture. It was determined that removal of non-hybrid germplasm has occurred for grains, vegetables and tree crops due to the introduction of latest commercial assortments of seeds. This has distressed domestic farmers to drop the riches of present selections to endorse latest and commercial seeds that are proven to be high in yields which are similar to the way globalisation has impacted natural varieties. The natural varieties are recognised for its capability to release genes against diseases and for different environmental adaptations. The development and conversion of minor lands for improving production is severely affected by globalisation.14 Globalisation has also impacted the breeding of livestock which consequently forced them towards extermination. It is also evident that globalisation has caused the loss of domestic livestock. A project by Aristide has concentrated on the slaughter of domestic Creole pigs from Haiti, demanding negligible preservation so as to replace them with Iowa’s pigs to advance the achievement of the project, but unfortunately the project was unsuccessful.15 There are numerous projects which are developed in every area of human enterprise for the advancement of globalisation but hardly any becomes successful, sustaining severe loss of environmental sustainability. Endangerment of wild species is a general observation. Majority of the wild species are now endangered because of increases in international trade, global expansion and the amplification in new technologies to satisfy the emerging demands. Fertile lands are drastically becoming large plantations which are developed to increase production. The ever-increasing building of dams, power plants and mining sites causes the extinction of species which are recognised to be indigenous to a particular geographical area. This is intensified by the rapidly increasing human population.16 These are considered to be the direct repercussions of globalisation. Indirect effects of globalisation on the environment include pollution from commercialised agriculture, increasing vehicles, and toxic waste from industrial and nuclear plants which causes alterations in the local climate because of the discharge of different corrosive chemicals from industrial plants as well as the release of gases such as carbon dioxide, methane, and others that significantly impact the natural environment. Presence of ecotourism-founded businesses and the increasing demands and aggressive competition to attract the market has resulted into the endangerment of wild life.17 It is apparent that with the arrival of globalisation, the interaction between humans and the wild life is turning out to be the spring of several new diseases. Furthermore, globalisation entails the worsening of the availability of natural resources such as water, oil and minerals. It is also resulting into the drastic loss of renewable and non-renewable natural resources. Environmental pollution is attributed to the burgeoning of industries, continuous burning of fossil fuels to sustain industrial operations. Customs laws and regulations are also protecting the environment, adding to the influence of globalisation. As stated by Yu and associates (2002), “A country importing dirty products essentially leaks its pollution to exporting countries that have less strict standards.”18 Moreover, “the conflict between trade and environment arises because countries with weak property rights appear to be more productive even when they are not, and export their natural resources unsustainably.”19 World Trade Organisation’s economists reveal dilemmas in implementing the General Agreement on Tariffs and Trade (GATT), which is intended to safeguard non-renewable natural resources and preserve human, animal and plant life. It was also stressed that environmental experts should present themselves to pressure the priorities of the WTO by providing clear-cut scientific proof of environmental damage.20 One of the frequently discussed repercussions of globalisation is the shipping of heavy, austerely processed foods which are available in surplus to the region wherein they were previously available.21 This not merely pressures the local manufacturers but also presses their priorities to produce more to muddle through the cutthroat competition. III. Conclusion Even though arguments on the impact of globalisation on the environment might occur at the global level, the repercussions of these dynamics are consistently national or local. It is apparent that the capacity to deal with these mechanisms, to profit from the advantages of globalisation and to lessen the risks of environmental damage is all tasks of vigilance, information dissemination and capacity. Prioritisation of these domains, and specifically in developing countries, can result into rapid as well as continuing advantages in relation to sustainability. Globalisation has significant capability to bring financial stability to the poor. Yet this capability cannot be fulfilled without the ability to realise it and preparedness within those societies to concretise these advantages. The function of global assistance in producing such preparedness and boosting such capabilities is crucial. Dealing with local capacity limitations, comprising, for instance, in early counsel; technology selection and novelty; decision assessment; durable investment assessment; and others, must, thus, be a major domain of global collaboration. References Christmann, P. & Taylor, G. (2001), Globalization and the Environment: Determinants of Firm Self-Regulation in China, Journal of International Business Studies , 439. Ferrantino, M. (1997), International Trade, Environmental Quality and Public Policy. World Economy , 43-72. Gulati, R. et al. (2000), Strategic Networks, Strategic Management Journal , 203-215. Low, P. & Yeats, A. (1992), Do Dirty Industries Migrate? In P. Low, International Trade and the Environment, Washington, DC: The World Bank. Micklethwait, J. & Wooldridge, A. (2001), The Globalization Backlash, Foreign Policy , 16. Taylor, T. (2002), The Truth About Globalization, Public Interest , 24+. Read More