Private Capital Flows and the Environment : Lessons from Latin America

by Gentry, Bradford S.

• ISBN13: 9781858989570
• ISBN10: 1858989574
• Format: Hardcover
• Copyright: 1999-01-01
• Publisher: Edward Elgar Pub

Summary

Gentry and his co-authors provide a set of case studies of the environmental impact of private capital flows into four Latin American countries. What emerges are some important insights into, first, how these flows affect the environment (with some surprises), and, second, how public and private agents can work together to accommodate both commercial gain and improved environmental performance. Private capital flows, properly channeled, can contribute to our goal of sustainable development. Wallace E. Oates, University of Maryland, US The authors succeed admirably in introducing the reader to the main issues and complexities surrounding this topic. . . . The book s major contribution, in my opinion, is that it challenges the conventional wisdom widely held in Latin America and elsewhere in the developing world that governments have sole responsibility for ensuring that environmental standards are met. Dennis J. Mahar, The World Bank, US Gentry and his colleagues have written a comprehensive and authoritative assessment of private capital flows to emerging market countries and of their impacts on the environment. They emphasize the critical role that private capital plays in the financial transfers from post-industrial to developing nations (far exceeding foreign aid) and illustrate the impact on four Latin American countries. Their analyses of the impacts, both positive and negative, of capital investment on environment and natural resources in emerging market countries yield the first objective assessment of how capital flows affect the prospects for sustainable development. This book will become a basic reference for policy makers, business executives, students of development, and environmental groups in discussions of the environmental consequences of economic globalization in the 21st century. The lessons of experience summarized here provide a strong set of directions for putting both wealthy nations and emerging market countries on the path to sustainable development. Dennis A. Rondinelli, University of North Carolina, US An important and timely contribution to the debate on sustainable development in the developing world and--implicitly--on the future of foreign aid. . . . It provides a balanced and much-needed assessment of the environmental effect that private capital flows--notably foreign direct investment--can exercise on the state of the environment in the developing world. Cord Jakobeit, Stanford-in-Berlin Centre, Germany With the dramatic shift from foreign aid to private investment as the engine of growth in many developing countries, what are the environmental implications? Can private capital actually be used to put us on the path to sustainable development? These are the questions tackled in Private Capital Flows and the Environment. Many different types of private investment are described and their impact on the environment analyzed, leading to the conclusion surprising for many that improved environmental performance can accompany foreign direct investment. The book, the first in-depth study of these important links, is built around a series of case studies of various industries in Mexico, Argentina, Brazil and Costa Rica. The authors, a multi-national, multi-disciplinary team of experts, show how governments of developing countries can actually attract foreign investors by integrating environmental considerations into their investment promotion efforts. The book also identifies points of leverage for actions by governments, investors, environmental groups, and customers to increase even further the environmental benefits that can accompany private capital flows. This book makes an important and timely contribution to the debate on foreign direct investment and sustainable development. It will be of great interest to scholars and students of environmental economics, development economics, international finance, law, and management as well as to policymakers, environmental advocates, and privat

Table of Contents

List of Figures	ix	(2)
List of Tables	xi	(2)
List of Boxes	xiii	(2)
List of Collaborators	xv	(4)
List of Abbreviations	xix	(4)
Acknowledgements	xxiii	(2)
Preface	xxv	(4)
Foreword	xxix
1 Overview -- Private Capital Flows and the Environment	1	(12)
Key Findings -- Opportunities, Not Just Risks	2	(1)
Policy Implications -- Expanding Commercial Advantage	3	(2)
Methodology -- Multiple Latin American Perspectives on a Global Phenomenon	5	(1)
Contents -- Flows, Environmental Aspects, Ways Forward	6	(7)
Part I Flows	13	(46)
2 Taxonomy -- Foreign Private Investment in Emerging Markets	13	(10)
Amounts -- Globally	13	(2)
Types -- Three Major Categories	15	(2)
Locations -- Geographically Concentrated in `Emerging Markets'	17	(1)
Sectors -- Varying Degrees of Environmental Impact	18	(1)
Investors -- Varying Degrees of Environmental Sensitivity	19	(1)
Country-specific Experience	20	(3)
3 Experience -- Private Capital Flows to Four Latin American Countries	23	(36)
Chapter Overview and Questions for the Cases	23	(1)
Section 3.1 Mexico	24	(8)
B.W. Husted
E. Rodriguez
Section 3.2 Brazil	32	(8)
P.H. May
A.C. Castro
A.B. de Castro
Section 3.3 Argentina	40	(9)
V. Burijson
L. Castelli
D. Lavalle Cabo
J.R. Walsh
Section 3.4 Costa Rica	49	(10)
L. Castro
E.R. Brenes
J. Rivera
Part II Environmental Aspects of Foreign Direct Investment	59	(216)
4 Agriculture -- Cases from Brazil and Costa Rica	59	(44)
Chapter Overview	59	(6)
Section 4.1 Financing Expansion of Brazil's Pulp and Paper Industry	65	(9)
P.H. May
V. Gonsalves da Vinha
Section 4.2 Expansion and Technological Innovation in Brazil's Soybean-based Agroindustrial Complex	74	(9)
A.C. Castro
P.H. May
Section 4.3 Bananas -- The Costa Rican Experience	83	(20)
J. Rivera
E.R. Brenes
5 Manufacturing -- Cases from Mexico and Costa Rica	103	(40)
Chapter Overview	103	(5)
Section 5.1 Mexico -- Impact of Environmental Policy Instruments of International Investors	108	(18)
B.W. Husted
E. Rodriguez
Section 5.2 Manufacturing Free Zones in Costa Rica	126	(17)
G. Quijandria
J. Rivera
E.R. Brenes
6 Privatization -- Argentina and Mexico	143	(74)
Chapter Overview	143	(7)
Section 6.1 Argentina -- Buenos Aires Water and Sewerage	150	(38)
B.S. Gentry
L.O. Fernandez
Section 6.2 Mexican Steel	188	(29)
B.S. Gentry
L.O. Fernandez
7 Public-Private Partnerships -- Costa Rica and Mexico	217	(58)
Chapter Overview	217	(6)
Section 7.1 The Tourism Industry in Costa Rica	223	(18)
J.Rivera
E.R. Brenes
G. Quijandria
Section 7.2 Joint Implementation in Costa Rica	241	(5)
L. Castro
G. Quijandria
E.R. Brenes
Section 7.3 Waste Water -- The Case of Juarez, Mexico	246	(29)
N. Kapur
A.K. Reynolds
Part III Ways Forward	275	(60)
8 Lessons -- The Environmental Content of Private Capital Flows	275	(18)
Environmental Content -- Both Negative and Positive	275	(1)
Five Reasons for Positive Environmental Content -- Commercial Advantage	276	(5)
The Changing Roles of Public and Private Parties in Improving Environmental Performance	281	(9)
Appendix -- Overview of Environmental Policy in Mexico, Brazil, Argentina and Costa Rica	290	(3)
9 Policy Implications -- Leverage Points and Changing Roles	293	(18)
Chapter Overview	293	(1)
Influencing Investor Decision-making	293	(6)
Changing the Role of Government	299	(7)
Appendix -- Overview of Investment Promotion in Mexico, Brazil, Argentina and Costa Rica	306	(5)
10 Opportunities -- Increasing the Environmental Content of Private Capital Flows	311	(18)
Actions by Governments -- Build Demand, Facilitate Information, and Support Deals	312	(8)
Foreign Direct Investors -- Keep Investing, Collaborate on Shared Goals, Demonstrate Links	320	(2)
Environmental NGOs -- Understand and Target	322	(2)
Private Financiers -- Ask Questions	324	(1)
Customers -- Buy Products	325	(4)
11 Further Work -- Steps on the Path to Sustainable Development	329	(6)
Steps on the Path to Sustainable Development	331	(1)
Changing Roles	332	(3)
Bibliography	335	(18)
Index	353