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Summary

The industrialization of the developing world is now and will continue to be predominately financed by private capital rather than bilateral or multilateral assistance. To the extent that associated pollution problems spill across national boundaries, this industrialization can no longer be viewed by the developed world as simply an investment opportunity but must also be seen as a potential source of pollution harm. Just as governments have an interest in investments made within their borders, the way in which capital is invested in developing countries has become a legitimate interest of policy makers in developed countries. Governments can advance their international environmental interests by direct assistance, and by providing incentives to the private sector. The private sector can assist in the establishment of environmental guidelines, labelling criteria, and investment guidelines. However, to be effective these mechanisms must be co-ordinated transnationally.