World Bank memos

Rob Schaap rws at
Wed Dec 2 08:03:26 PST 1998

Hi again, Brad,

I agree things are complicated as things stand, but the way I read Summers' argument, he was saying the World Bank should help the migration of dirty industry to LDCs because it made economic sense. Like I said, he is a more forthright and honest pig than some of his gutless peers.

An Uneducated Speculation: The dirty enterprise that actively migrates, must be migrating from the first world, no? That'd likely make it first-world-owned, no? That'd mean first-world corporations would wear the cost of 'best practice' controls, no? So moving 'em to the LDCs is just a way these corps get to avoid an investment they'd have to make in California.

Furthermore, geosectoral (is that a word?) allocations like this, entrench ever worse dependency relationships, in that the cancerous locals are definitively enmeshed in low value-added enterprise (by Summers' own logic - and wasn't this why the Bank's famous Green Revolution campaign hit the wall back in the early '80s?), where profits are definitively expatriated, and environment equally definitively robbed of all kinds of 'utility' (I s'pose this is an 'opportunity cost'?). So the locals seem to confront the choice between, as you rightly put it: 'keeping people in developing economies poor so they won't pollute very much... ' and, as I might put it, 'keeping people in "developing" economies poor while they do pollute very much'.

An Unimpeachably Sourced Stat: Henwood, D. had it that the WB had just coughed up $7 billion in interest and fees to the its bankers, leaving a $1.2 billion surplus. Would Summers have been in any worse trouble if he'd divided the cost of said pollution-control plant into a chunk of that $8.2 billion per annum?

Cheers, Rob.

You'd wriiten:

>In a lot of manufacturing industries, "dirty" production processes are a
>lot cheaper than "clean" ones. Since labor productivity in many developing
>economies is still very low, a demand that developing countries adopt
>first-world standards of pollution control may be a demand that they not
>industrialize--that they stay very poor.
>It's not clear what the right policy is. It is clear that taking expensive
>steps to reduce the risk of prostate cancer (the reference in your last
>sentence) which kills you a long time from now when you are old should not
>be a high priority as long as you still have amoebic dysentery and cholera
>in your water. And to the extent that industrializing faster in a
>cheap-and-dirty way gets your government the resources to clean up the
>water, industrializing faster is a good thing.
>Things are complicated--and this is why it is hard to figure out what the
>right thing to do is--by the fact that the beneficiaries from
>cheap-and-dirty forms of industrialization (the bosses of manufacturing
>firms, and those workers employed in them who aren't whomped by
>pollution-related diseases) are different from those who suffer from
>pollution (children who get lung diseases, and nearby residents poisoned by
>heavy metals). Will the profits from cheap-and-dirty industrialization go
>to cleaning up the public water supply? Or will they go to Swiss bank
>As I understand the context of Lant Pritchett's memo, it was written in an
>internal World Bank debate with a whole bunch of guys who were ducking this
>whole set of issues, and simply saying that no factory should be built
>anywhere in the world that does not use best-world-practice emissions
>control methods--and thus had gone overboard on the "Malthusian" side:
>arguing (implicitly at least) that the best policy is to keep people in
>developing economiespoor so they won't pollute very much...
>Brad DeLong

More information about the lbo-talk mailing list