Environmental Costs of Industrial Globalization
- Imagine a factory in a low-income country (LIC) producing goods for high-income countries (HICs).
- The factory provides jobs but also releases untreated waste into nearby rivers, harming ecosystems and communities.
This scenario highlights a key issue of industrial globalization: the environmental costs (externalities) often borne by LICs.
Manufacturing Industries: Pollution and Lax Regulations
Why Do Industries Relocate to LICs?
- Cheaper Labor: Lower wages reduce production costs.
- Lax Environmental Regulations: Fewer restrictions on pollution and waste management.
- Tax Incentives: Governments offer incentives to attract foreign investment.
Many students assume that relocating industries always benefits LICs economically. However, the environmental costs can outweigh short-term gains, leading to long-term health and ecological crises.
Theory of KnowledgeHow can we balance economic growth with environmental sustainability? Should HICs be held accountable for the environmental impacts of their outsourced industries?
Why Does Pollution Happen?
- Weak Enforcement: Regulations exist but are poorly enforced due to corruption or lack of resources.
- Economic Priorities: Governments prioritize economic growth over environmental protection.
- Limited Awareness: Communities may lack knowledge about the long-term impacts of pollution.
When studying case studies, focus on both the economic benefits and environmental costs to provide a balanced analysis.
TipAvoid assuming that all LICs and MICs lack environmental regulations. Some countries, like Costa Rica, have implemented strong policies despite economic challenges.
Agribusiness Impacts: Deforestation and Resource Depletion
Agribusiness Controls Global Food Production Systems
- Agribusiness: TNCs specializing in agriculture - production of seeds, fertilizers, pesticides, and farm machinery, farming itself, food processing, distribution and marketing.
- Most of 40% of Earth's terrestrial surface used for agriculture is controlled by agribusiness.
- Around 500 companies control 70% of food choice. Some of them are well-known and recognizable by consumers, some remain highly specialized and are rather known only by farmers.
Some of the most prominent examples of agribusiness include:
- Monsanto - food technology, GMOs, pesticides
- John Deere - farm machinery
- Cargill - land owner and food production
- Kraft Foods, Unilever, Nestle or Coca Cola - food processing, distribution, and marketing
- Walmart, Carrefour - food retailing
