Is East Asia Industrializing Too Quickly? Environmental Regulation in Its Special Economic Zones

Abstract

East Asia is undergoing its own industrial revolution. Special economic zones SEZs are playing a key role. However, it has brought great environmental oncern. "Race to the bottom" and related theories of the effects of inter-jurisdictional competition for investment predict that environmental regulation would be compromised in SEZs. Contrary to such hypotheses, there is some evidence that environmental regulation in East Asia's industrialising zones is stricter than in other parts of their economies, ad that foreign investors are sometimes more strictly regulated than local businesses. The experiences of East Asia's SEZs -- particularly in China -- suggests that we need to rethink how we conceptualise the relationships between environmental law and foreign investment in the context of rapidly industrialising developing countries. This experience also reveals persistent weaknesses in the legal systems of East Asia and the fragility of the rule of environmental law. To address this, further reform to the environmental regulation of SEZs should be grounded in more wide-ranging and basic improvements to administrative regimes, policy instruments and access to justice.