Policy Integration: From Technology Upgrading to Industrial Environmental Improvement

How might governments in East Asia take advantage of their technological capabilities building policies to lower the environmental burden of high speed industrial growth within the region? Our answer to this question draws heavily on the increasing dissatisfaction within the OECD economies in the traditional way, through command and control environmental regulatory agencies, in which governments in the OECD have pursued improvements in the environmental performance of industry (Davies and Mazurek 1998; NAPA 1995). As some (Hausker 1999) have argued, command and control regulatory approaches fail to capitalize fully on the innovative capabilities of Wrms and industries and as a result generate costs of abatement that are unnecessarily high. Because of this, others (Chertow and Esty 1997; Gunningham and Grabowsky 1998) have urged greater flexibility and innovation in how environmental goals are met. Various alternatives have been proposed, including greater use of information-based policy tools, devolution of policy implementation to regions and localities, and increased cooperation between government and industry in seeking cost-effective solutions to environmental concerns. Critics of these proposed reforms suggest that ceding discretionary decision-making authority to firms and industries amounts to a weakening of regulatory enforcement that will undermine future gains in environmental performance. Our purpose in this chapter is to build on the calls for environmental regulatory reform by demonstrating that there are approaches to improving the environmental performance of industry that are emerging in East Asia that take greater advantage of the capabilities building activities of firms in developing economies without sacrificing the ability of regulators to hold these firms to tough performance standards. We do so by examining the contribution of a broad array of government institutions in such reform initiatives in the rapidly industrializing economies of East Asia. Within the United States, environmental regulatory reform initiatives are focused primarily upon the environmental regulatory agency, the US Environmental Protection Agency (US EPA). Various European countries have explored different approaches to environmental protection, such as the creation of ‘environmental covenants’ between government and industry in the Netherlands.