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UCLA Pacific Basin Law Journal. Volume 22, Issue 1 (2004), p. 150-244.


East Asia is undergoing its own Industrial Revolution. Special economic zones (SEZs) are playing a key role in its economic transformation. However, industrialization has brought great environmental concern. Over recent decades, China, the Philippines, South Korea, and other newly industrializing economies in East Asia have designated special areas for foreign investment and export production to which have been conceded favourable investment and trade conditions, and often exemption from certain kinds of regulation. "Race to the bottom" and related theories of the effects of inter-jurisdictional competition for investment predict that environmental regulation would be compromised in SEZs. Contrary to such hypotheses, there is some evidence that environmental regulation in East Asia's industrializing zones is stricter than in other parts of their economies, and that foreign investors are sometimes more strictly regulated than local businesses. The experience of East Asia's SEZs - particularly in China - suggests we need to re-think how we conceptualise the relationships between environmental law and foreign investment in the context of rapidly industrializing developing countries. This experience also reveals persistent weaknesses in the legal systems of East Asia and the fragility of the rule of (environmental) law. To address this, further reform to the environmental regulation of SEZs should be grounded in more wide-ranging and basic improvements to administrative regimes, policy instruments and access to justice.

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