Michael T. Rock

Corruption and Democracy

Abstract Most models and empirical tests of the relationship between corruption and democracy assume corruption falls as democracy matures. Yet recent theoretical developments and case evidence suggest an inverted U relationship between the two, although so far no one has tested for this relationship. By drawing on a panel data set covering a large number of countries between 1982–1997, substantial empirical support is found for an inverted U relationship between the durability (age) of democracy and corruption. Fortunately, the turning point in corruption occurs rather early in the life of new democracies – between 10–12 years.

Pollution intensity of GDP and trade policy: Can the World Bank be wrong?

Abstract What are the environmental implications of open trade policies in developing countries? Economic theory and environmental critics suggest they worsen environmental quality. This conventional wisdom has been challenged by several studies which suggest that outward-oriented trade policies are likely to be “win-win” (enhance economic growth and environmental quality). This paper challenges revised conventional wisdom (RCW) by demonstrating that developing countries with outward-oriented trade policies have higher pollution intensities of GDP than those following inward-oriented policies. The paper examines why the evidence reported here differs so sharply from RCW studies, considers the policy implications of these results, and identifies reasons why, despite them, it may not make sense to totally discount future potential win-win opportunities

Reassessing the Effectiveness of Industrial Policy in Indonesia: Can the Neoliberals be Wrong?

Abstract —The neoliberal interpretation of the Indonesian state suggests that industrial policy was incoherent, subject to rent-seeking, and irrelevant to Indonesias post-1966 development success. A more nuanced micro-historical analysis of the states interventions demonstrates that this oversimplification misses political elite objectives to overcome the “ ekonomi kolonial ” by using the power of the state and selective intervention to create a strong, integrated, diversified, and outward-oriented industrial economy (“ ekonomi nasional ”). Empirical analysis presented here suggests that Indonesia has largely achieved this objective. It also suggests that industrial policy has been more important than the neoliberal argument permits.

What is Driving the Pollution Abatement Expenditure Behavior of Manufacturing Plants in Korea

Abstract Relatively little is known about the environmental behavior of manufacturing plants in Korea. We address this lacuna by reporting the results of a survey designed to assess the scope of plant-level pollution abatement expenditures, the intensity of plant-level exposure to regulatory actions and community pressure, and the impact of each on abatement expenditures. Survey results reveal substantial expenditures on pollution abatement and significant exposure to regulatory actions and community pressure. Two-stage least squares (TSLS) estimation of a responsive regulation type model suggests that Korean regulators may be engaged in responsive regulation that works and that plant characteristics (size, productivity, and ownership) and community pressure also affect plant-level abatement expenditures.

Global standards and the environmental performance of industry

In this paper we examine the emergence of firm-based global environmental standards as an approach to managing the environmental performance of complex global production networks. Firm-based global environmental standards exist when a firm defines a uniform set of process and product environmental performance requirements that must be adhered to by all of a firms facilities around the world, even if these firm-based standards exceed the requirements of local and national environmental regulations. We identify increasingly stringent end-market environmental regulation, as well as growing concern over the need to protect a firms reputational capital and operating legitimacy, as two key drivers of the adoption of firm-based environmental standards. Our analysis suggests, however, that firms are responding to these external drivers in part because of the characteristics of global production networks—a production form that depends on the ability to produce from any manufacturing plant to any end market. The paper examines the impact of firm-based environmental standards through case studies of a cement plant in Thailand and an electronics manufacturing plant in Penang, Malaysia. In line with the literature on new institution economics, the case studies demonstrate that firm-based standards are providing a platform for learning and innovation within the firm.

Freshwater Use, Freshwater Scarcity, and Socioeconomic Development

Several influential studies suggest that population and income growth lead to increasing demands for freshwater and freshwater scarcity. Unfortunately, there is little rigorous empirical testing of this hypothesis. This article relies on a cross-country multiple regression framework pioneered by Kuznets, Chenery, and Chenery and Syrquin to analyze the structural transformation in water use as socioeconomic development occurs. Cross-country regressions are cross-checked by time-series (and cross-state) regressions for the United States. Results suggest that water use exhibits an inverted-U relationship with income per capita. The findings also suggest that this relationship is affected by the efficiency of water use in agriculture, by whether a country was in the former Soviet Union, and by a countrys trade policy. Taken together, these findings suggest a need for a rethinking regarding freshwater use and freshwater scarcity as socioeconomic development proceeds.

Asia’s Clean Revolution – Industry, Growth and the Environment

Preface Owen Cylke, US-Asia Environmental Partnership and Winrock International, USA, Somporn Kamolsiripichaiporn, Chulalongkorn University, Thailand 1. Toward clean shared growth in Asia David P. Angel, Clark University, USA, Michael T. Rock, Hood College, USA Tubagus Feridhanusetyawan, Centre for Strategic and International Studies, Indonesia Part 1: Framing the Issues David P. Angel and Michael T. Rock 2. Technology and environmental performance: leveraging growth and sustainability George R. Heaton, Jr, Worcester Polytechnic Institute, USA Budy Resosudarmo, Indonesian Government Agency for the Assessment and Application of Technology and University of Indonesia 3. Globalisation and the environment in Asia: linkages, impacts and policy implications Daniel Esty, Yale Law School and Yale School of Forestry and Environmental Studies, USA Mari Pangestu and Hadi Soesastro, Centre for Strategic and International Studies, Indonesia 4. Public policies to promote cleaner shared industrial growth in East Asia Michael T. Rock, Ooi Giok Ling, Institute of Policy Studies, Singapore, and National University of Singapore Victor Kimm, University of Southern California, USA 5. Industrialising cities and the environment in Pacific Asia: toward a policy framework and agenda for action Michael Douglass, University of Hawaii, USA, and Ooi Giok Ling 6. Civil society and the future of environmental governance in Asia Lyuba Zarsky, Nautilus Institute for Security and Sustainable Development, USA Simon S.C. Tay, National University of Singapore Part 2: Case Studies in Innovation David P. Angel and Michael T. Rock 7. Putting pressure on polluters: Indonesias PROPER programme. A case study for the Harvard Institute for International Development 1997 Asia Environmental Economics Policy Seminar Shakeb Afsah, International Resources Group, USA Jeffrey R. Vincent, Harvard Institute for International Development, USA 8. Water pollution abatement in Malaysia Jeffrey R. Vincent Rozali bin Mohamed Ali, Asset-Holding Berhad, Malaysia Khalid Abdul Rhaim, Universiti Putra Malaysia 9. Toward more sustainable development: the environment and industrial policy in Taiwan Michael T. Rock 10. Measuring up: toward a common framework for tracking corporate environmental performance Daryl Ditz, Environmental Law Institute, USA Janet Ranganathan, World Resources Institute, USA Postscript Melito Salazar, Bangko Sentral ng Pilipinas Warren Evans, Asian Development Bank, Philippines

Integrating Environmental and Economic Policy Making in China and Taiwan

What, if anything, are two of East Asias high-growth economies—China and Taiwan—doing to integrate environmental considerations into economic policy making? The two case studies developed here demonstrate that innovative officials in each have found ways to get powerful economic agencies to take environmental considerations into account. In China, national officials in the State Environmental Protection Administration and local officials in city-level environmental protection bureaus use a city-level environmental rating, ranking, and public disclosure program along with an environmental target responsibility system to get mayors to invest in environmental improvement. In Taiwan, the building of a tough and competent environmental regulatory agency that simply bypassed the governments premier industrial policy agency forced the latter to integrate environmental considerations into industrial policy making. In both instances, there is some evidence that these innovations are working. But in both, much more needs to be done.

Factors Influencing Energy Intensity in Four Chinese Industries

In this paper, we investigate the determinants of decline in energy intensity in four Chinese industries - pulp and paper, cement, iron and steel, and aluminum. This paper attempts to answer the following key question: For the purpose of promoting energy efficiency, do prices, technology, enterprise restructuring and other policy-related instruments affect various sectors uniformly so as to justify uniform industrial energy conservation policies, or do different industries respond significantly differently so as to require policies that are tailored to each sector separately? In this paper, we examine this question using data for Chinas most energy-intensive large and medium-size enterprises over the period 1999-2004. Our results suggest that in all four industries rising energy costs are a significant contributor to the decline in energy intensity over our period of study. Chinas industrial policies encouraging consolidations and scale economies also seem to have contributed to reductions in energy intensity in these four industries.

The Dewatering of Economic Growth

Summary Recent research has found an inverted U relationship between freshwater use and income after controlling for freshwater availability, the structure of the economy, and several policy variables. This suggests that the intensity of freshwater use must be declining with income growth. This hypothesis is tested by developing a simple, informal model of the determinants of freshwater-use intensities across countries and over time. Results suggest that water-use intensity declines across the entire range of per capita incomes extant in the world today. They also show that the relationship between intensity of use and income is mediated by an economys natural water endowment, the structure of the economy, and government policies. Four policies, in particular, affect the water-use intensity of economies. Open trade policies and tough environmental regulatory policies lower water use intensities, and narrowly defined food self-sufficiency policies and socialist development policies increase water-use intensities. These findings suggest that those interested in water, water scarcity, and water policy need to extend beyond simple extrapolations of past consumption patterns and narrowly focused water policies (such as water pricing) if they want to improve water management practices.