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Greening China

The Benefits of Trade and Foreign Direct Investment

Ka Zeng and Joshua Eastin

Publication Year: 2011

“The authors make some very critical interventions in this debate and scholars engaged in the environmental ‘pollution haven’ and ‘race to the bottom’ debates will need to take the arguments made here seriously, re-evaluating their own preferred theories to respond to the insightful theorizing and empirically rigorous testing that Zeng and Eastin present in the book.” —Ronald Mitchell, University of Oregon China has earned a reputation for lax environmental standards that allegedly attract corporations more interested in profit than in moral responsibility and, consequently, further negate incentives to raise environmental standards. Surprisingly, Ka Zeng and Joshua Eastin find that international economic integration with nation-states that have stringent environmental regulations facilitates the diffusion of corporate environmental norms and standards to Chinese provinces. At the same time, concerns about “green” tariffs imposed by importing countries encourage Chinese export-oriented firms to ratchet up their own environmental standards. The authors present systematic quantitative and qualitative analyses and data that not only demonstrate the ways in which external market pressure influences domestic environmental policy but also lend credence to arguments for the ameliorative effect of trade and foreign direct investment on the global environment.

Published by: University of Michigan Press


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pp. viii-ix

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Chapter 1: Theoretical Contentions and Analytical Approaches

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pp. 1-13

The debate over the effects of trade liberalization and foreign direct investment (FDI), or economic “globalization,” on environmental protection has generated intense scrutiny from environmentalists, policymakers, and academics alike. On the one hand, many economists and globalization proponents contend that the economic gains captured from free trade and FDI offset

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Chapter 2: Debunking the “Pollution-Haven” and “Race-to-the-Bottom” Hypotheses

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pp. 14-36

This book grounds its analyses in the “pollution-haven” (PH) and “race-to-the-bottom” (RTB) propositions. In doing so, we provide support for the “trading-up” and “investing-up” arguments, and the general notion that economic globalization can be beneficial to the natural environment.1 This chapter details our primary ....

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Chapter 3: Environmental Pollution and Regulation in China

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pp. 37-61

This chapter introduces China’s perilous environmental situation and the steps the Chinese government has taken to address what some have called “one of the greatest environmental threats the earth has ever faced.” 1 We highlight the actors involved in the system of Chinese environmental protection, with particular attention to the limited role of the environmental protection agencies in ...

Provincial-Level Analyses

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Chapter 4: Pollution Havens and Racing to the Bottom: A Provincial-Level Analysis

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pp. 65-96

This chapter provides an empirical test of the pollution-haven and race-to-the-bottom hypotheses among Chinese provinces. According to the pollution-haven hypothesis, foreign investors have financial incentives to seek out areas of lax environmental regulation to establish production operations.1 The concentration of pollution-intensive investment in these areas turns them into ...

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Chapter 5: Do Chinese Provinces “Trade Up” and “ Invest Up”?

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pp. 97-114

In this chapter, we analyze how regulatory pressure in primary export markets and FDI source countries affects Chinese provincial environments. Our empirical results demonstrate that provinces that export to or receive the bulk of their investment from countries with superior environmental standards also tend to be more environmentally responsible. In a refinement to our original argument, we...

Firm-Level Analyses

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Chapter 6: How Do Firms Behave? Survey Evidence from Business Executives

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pp. 117-142

This chapter supplements our provincial-level analyses with a survey of Chinese business executives’ attitudes toward environmental protection and the motivations, costs, and benefits of implementing environmentally sound business strategies. The survey results lend substantial support to our key hypotheses about the ratcheting-up effect of trade and FDI on environmental standards...

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Chapter 7: Asia Pulp & Paper: Local Standards, World Markets, and Environmental Protection

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pp. 143-169

Through analyses of Chinese provincial-level data and survey data, the previous chapters suggest that economic integration with developed-world markets encourages companies to adopt more sustainable business practices. By ensuring further development and innovation of environmental abatement technology and by facilitating the transfer of corporate norms of environmental ...

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Chapter 8: Implications, Caveats, and Future Research Questions

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pp. 170-184

This project examines the impact of trade and foreign investment on the environment in China, a country that is undergoing both rapid industrialization and unprecedented environmental degradation. Our empirical analyses provide a strong critique of the race-to-the-bottom and pollution-haven arguments.Rather than leading to further environmental damage, China’s economic ...


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pp. 185-210


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pp. 211-228


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pp. 229-239

E-ISBN-13: 9780472027101
E-ISBN-10: 0472027107
Print-ISBN-13: 9780472117680
Print-ISBN-10: 0472117688

Page Count: 264
Illustrations: 15 Figures, 26 Tables
Publication Year: 2011