Suchergebnisse

Environmental consequences of the high standard of living in developed nations or of the economic engagement of companies based in industrialized countries are often born by the developing countries of the world. In three essays two different aspects of environmental consequences of North-South Economic Relations are analyzed. The first two essays jointly enhance the existing literature on the impact of resource extraction, conducted by the North, on the local environment of the South. With the help of a theoretical model the first essay determines South's local environmental quality in the context of a resource extraction contract in dependence of the democratic institutions in the host country. The quality of South's democratic institutions indicate the risk of expropriation as well as the degree to which the South internalizes environmental harm in the model. Meanwhile, the quality extraction technology provided by the North varies in marginal resource extraction costs as well as marginal pollution. Combining these various effects, the theoretical model cannot determine a unique impact of an improvement in democracy on the environment. The consecutive numerical simulation of three distinct cases suggests, however, that despite these contradicting forces environmental quality always benefits from improvements in democracy. The empirical investigation of the second paper supports this finding by showing that the level of the host country's democracy determines the extent of deforestation associated with oil drilling in a global cross-country comparison. The study reveals vast differences across countries in the amount of forest clearance due to oil drilling in the closest vicinity to oil wells. Making use of a quasi-natural experiment, difference-in-difference regressions identify the level of democracy as determining factor for the degree of deforestation due to oil drilling. While the discovery of oil in countries with high democracy scores is associated with clearance of 35% of the immediate vicinity of an ...

This paper analyzes resource partnerships and their influence on the environmental quality in a resource-rich country by introducing incomplete contracts, imperfect property rights protection, and a lack of valuation for the environment by the government in the South. Employing numerical simulations, I determine the equilibrium extraction rate, the applied extraction technology, and the environmental quality in dependence of the state of democracy in the resource-rich country. In contrast to what one might expect, under certain circumstances it can be environmentally beneficial to have incomplete contracts that induce the utilization of a suboptimal technology for resource extraction. Further, reducing the holdup problem by shifting bargaining power to the North, is only desirable if the environmental quality increases with a better extraction technology.