DETERMINANTS OF POLLUTION-ABATEMENT IN DEVELOPING-COUNTRIES - EVIDENCE FROM SOUTH AND SOUTHEAST-ASIA

Developing countries, particularly those in Asia, are fast adopting in dustrial pollution control standards similar to those in developed cou ntries. Formal regulation has been greatly hampered, however, by the a bsence of clear and legally binding regulations; limited institutional capacity; lack of appropriate equipment and trained personnel; and in adequate information on emissions. One would predict highly pollution- intensive production under such conditions. Our research, however, has uncovered strongly contradictory evidence. Despite weak or nonexisten t formal regulation, there are many clean plants in the developing cou ntries of South and Southeast Asia. Of course, there are also many pla nts which are among the world's most serious polluters. What explains such extreme interplant variation? This paper reviews evidence drawn f rom three empirical studies of plant-level abatement practices conduct ed 1992-94. The analyses test the importance of plant characteristics, economic considerations and external pressure in determining environm ental performance. The results consistently show that pollution intens ity is negatively associated with scale, productive efficiency, and th e use of new process technology. It is strongly and positively associa ted with public ownership, but foreign ownership has no significant ef fect once other plant characteristics are taken into account. Among ex ternal sources of pressure, community action, or informal regulation, emerges as a clear source of interplant differences in all three studi es. The results suggest that local income and education are powerful p redictors of the effectiveness of informal regulation. They also show that existing formal regulation has measurably beneficial effects, eve n when it is quite weakly developed. Copyright (C) 1996 Elsevier Scien ce Ltd