Environmentalists have long assumed that multinational companies represent environmental threats -- consuming resources at unsustainable levels, seeking tax regulation, polluting with abandon, and exploiting the desires of developing countries for economic growth and improved material well-being. Private Capital Flows and the Environment: Lessons from Latin America debunks this dated outlook. Brad Gentry and his co-authors demonstrate that foreign investment often leads to significant environmental improvements as multinational companies bring to their joint ventures in the developing world new plant and equipment (which is almost always less polluting than the existing industrial base of the venture partner), environmental management programs and commitments, and environmental training facilities and knowledge.
This book further reveals that privatization of government enterprises also offers the promise of environmental gains. The pressure from market forces for efficiency frequently translates into incentives to reduce waste and therefore pollution. Moreover, governments are much more willing to enforce emissions standards when a facility is privately rather than publicly owned. Private capital flows do not guarantee improved environmental results. Competitiveness pressures can make commitments to pollution control harder to keep. But, as this study makes clear, it is important to understand how private capital can be steered toward better environmental outcomes -- both investments in environmental infrastructure (water, waste, and energy projects) and appropriate resource commitments to habitat protection and pollution abatement for every road, bridge, power plant, and factory that is constructed.
Private Capital Flows and the Environment: Lessons from Latin America vividly demonstrates that prospects for sustainable development around the world turn today on private international finance -- not official development assistance through bilateral foreign aid or multilateral development banks. For example, in 1997, China received more than US$40 billion in foreign investment and just over US$2 billion in official development assistance.