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Globalization of Industrial Production : The case of the Electronics Industry and Its Environmental Impact

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Globalization of Industrial Production : The case of the Electronics Industry and Its Environmental Impact Thanpuying Suthawan Sathirathai, Ph.D. – PowerPoint PPT presentation

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Title: Globalization of Industrial Production : The case of the Electronics Industry and Its Environmental Impact


1
Globalization of Industrial Production The
case of the Electronics Industry and Its
Environmental Impact
  • Thanpuying Suthawan Sathirathai, Ph.D.
  • Good Governance for Social Development
  • and the Environment Institute (GSEI)

2
Major factors which have impact on industrial
environmental management in Thailand -
  • ? External Factors Globalization
  • ? Internal Factors Domestic policy

  • and governance

3
Major factors which have impact on industrial
environmental management in Thailand -
  • External Factors -
  • ? Unilateral investment liberatization
  • ? International Trade and Investment Agreements
  • - Multilateral Agreements (WTO)
  • - Bilateral and Regional Agreements (such as
    FTAs)
  • Foreign Direct Investment (FDI), increased by
  • 34 in 2005

4
Major factors which have impact on industrial
environmental management in Thailand -
  • External Factors -
  • ? International environmental agreements -
  • ? Multilateral Environmental Agreement
    (MEAs)
  • (Basel convention, Kyoto Protocol and
  • CBD etc.)
  • ? EU Directives (WEEE, ROH, REACH etc.)

5
Current trends in Developed Countries (EU,
Japan, US etc.)
  • ? Developed countries relocate production by
    outsourcing the manufacturing process
    (deindustrialization) to developing countries and
    LDCs, while moving towards high-income
    knowledge-based service industries.
  • ? After the East Asian crisis, the inflow FDI
    service industries (power generation and
    distribution, telecoms etc.) rose to 44 in 2001.
    At the same time their manufacturing FDI
    declined from 40 to 35.

6
Current Trends in Developing Countries -
  • ? The inflow of manufacturing FDI among
    developing countries in
  • South, East and Southeast Asia increased by
    54 in 2005
  • ? Large sector inflows are in electronics and
    automobiles

Motives for Developed countries outflow of FDI -
  • ? Low-cost manufacturing base
  • - Outsource manufacturing process involving
    semi- skilled and un-skilled labour
  • - Lower environmental costs leading to the
    Pollution havens problem (The study Impact
    on the Environment of Thailands Trade with OECD
    Countries, Asia-Pacific Trade and Investment
    Review, Vol.2, No.1 by Kakali Mukhopadhyay,in
    May2006)
  • ? Open up domestic markets in developing
    countries

7
Important Conditions -
  • ? FDI takes place in the proviso that
    technology transfer can not be a requirement. At
    the same time Intellectual Property Rights are
    strictly protected (through Performance
    Requirement and IP of the international trade and
    investment agreements.)

8
Major factors which have impacts on industrial
environmental management in Thailand
  • Internal Factors
  • Development Policy / Approach
  • - Not in line with sustainable development
    by focusing on short-term economic objectives,
    while ignoring environmental and social impacts.
  • 1. Promote every kind of investment without
    considering long term benefits and costs.
  • 2. Overlooking technology upgrading and human
    resources development which has led to the
    country becoming totally dependent on foreign
    capital and technology in industrial development.
  • As a result less bargaining power
    attracting foot loose industry

  • (detrimental to the
    environment

  • and workers health)

9
Globalization of supply chain
  • The Case of Electronics Industry

Highest value-added (US,Japan,EU,Korea etc.)
Control of Technology ,RD ,Brandname
High/medium value-added (Japan,Singapore,Taiwan
province of China, etc.)
Contract Manufacturers (CM) Control of logistic
and production plan
Lowest value-added (Thailand, The Philippines,
Vietnam, Indonesia etc.)
Manufacturing process with labour
intensive (Assembling)
10
Major factors which have impact on industrial
environmental management in Thailand
  • Internal Factors
  • ? Environmental governance
  • - No checks and balances in the industrial
    environmental management system (problems of
    conflicting roles in the governmental agency. DIW
    has both the roles of promoting industries while
    regulating their environmental performances at
    the same time)
  • - Wrong incentives (PPP never works) because law
    enforcement and monitoring system fails.
  • - No transparency (Access to information is not
    possible)
  • - No public participation (So far local
    communities have limited legal rights in
    protecting the environment.)

11
Important observation -
  • Without bargaining power because of economic
    dependency (especially with no local technology
    and high quality human resources), good
    governance is even harder to achieve. The country
    cannot afford to have and enforce strict
    environmental regulations for fear of driving
    footloose industries away.

12

Through IP and Performance Requirement in
Investment Chapters (harder for technology
upgrading)
Concluding picture
External factors (esp. Trade and Investment
Agreements)
Low bargaining power (highly dependent on
foreign technology/intermediate good/can offer
only labour for local inputs)
Low value-added products
Internal factors - - Development approach -
Environmental governance
Short-term economic objectives
Attracting low-quality FDI (foot-loose industries)
Poor governance
Environmental and Health problems in Electronic
industry
13
  • ? Sufficiency Economy (S.E.) Philosophy
    emphasizes a balanced way of development and
    strengthening the countrys immune system.
  • ? Appling S.E. Philosophy focusing on how
    Thailand can leverage on the existing trend of
    globalization and the same time
  • protect our peoples welfare and the
    environment. -
  • Less dependency improve
    bargaining power

  • by upgrading industries through

  • technology competence,

  • development of human

  • resources, productivity

  • improvement
  • Strengthening Thailand competitiveness by
    searching for our potential niche market
    (agritronics etc.)
  • ? Improve environmental governance
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