The effects of transnational manufacturing and services


Externalities: An impact or affect that is caused by an unconnected event or process. Externalities can be both positive or negative.

Negative externalities usually affect poor people the most. Poor people tend to be people who are forced to live near polluting factories because they can't afford to live anywhere else. The old/young and sick are also vulnerable to pollution caused by industry. Many polluting industries also choose to locate in LEDCs for a number of reasons including:
  • More relaxed environmental regulations
  • Less enforcement of environmental regulations (this might be because they can't afford to enforce, because they are being paid to overlook (corruption), or they are worried about losing FDI.
  • Access to a new potential marketplace
  • Access to raw materials (which again might be extracted using polluting methods)
  • Availability of cheap labour
  • Cheap land and building materials (possibly relaxed building regulations)

Depending on the type of externality, some can just have local impacts on the surrounding houses and communities or others can have much bigger impacts covering whole countries or even the globe. The Chernobyl Nuclear accident in the Ukraine has created long-tern negative externalities, but it also greater much wider temporary negative externalities across much of Europe. For more information about Chernobyl go to: Human-induced Hazard.

Examples of Positive Externalities

Examples of Negative Externalities

  • Local businesses may see an increase in business as workers and customers buy from local shops.
  • Transport links e.g. access roads may be improved
  • Improved recognition and reputation of an area that may attract future investment and FDI.
  • Improved electricity, gas and water provision.
  • Possibly improved education, leisure and medical facilities to cater for increased population and wealth.
  • Increased noise pollution because of deliveries and equipment
  • Increased congestion on roads because of deliveries and workers
  • Increased air pollution because of equipment and vehicles (this can be local and/or global)
  • Increased damage to road because of HGVs (heavy good vehicles). These might also cause damage to property through vibrations
  • Increased visual pollution (especially factories) which are not pleasant to look at
  • Increased water pollution (surface and groundwater). Polluted water might be necessary for drinking, farming or enjoying for leisure

Kuznets Curve


The Kuznets curve represents Simon Kuznets's theory. Initially the curve was developed to show how economic inequality changes as a country develops. However, the curve has also been applied to show how environmental degradation changes over time. It basically says in the early stage of development the main priority of any country is development. However, after a certain standard of living is reached (the tipping point) there is an increased emphasis on pollution, both by individuals, countries and companies. At this point the investment in the environment increases and the quality of the environment increases. The emphasis on the environment increases for a number of reasons including:

  • People have a comfortable standard of living
  • People have increased leisure time and disposable income
  • People have increased awareness of environmental issues (news, education)
  • People spend more time enjoying the environment (holiday, sport, recreation, etc.)
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Bhopal


Bhopal has a population of about 1.8 million and is the capital of the Indian state of Madhya Pradesh (Central India). Bhopal is most well known for the massive chemical leak that happened on the night of 3rd December 1984. The leak happened at a pesticide factory owned by the US company Union Carbide. Methyl isocyante was released into the atmosphere during the explosion (a valve is believed to have exploded under pressure in a storage tank) and leak. The temperature inside the storage tank was about 200 degrees Celsius before the explosion. The temperature and pressure inside the tank increased because water leaked into the tank causing an exothermic reaction. In total about 30 metric tons of gas was released over a 60 minute period.

The exact number of deaths and injuries is not fully known have the state government said 3,787 deaths can be related to the leak and over 500,000 temporary or permanent injuries. However, some campaigners say that up 20,000 additional people have died since the disaster.

A number of factors were blamed for the leak and the consequences of the leak, including:
  • Its location next to residential areas
  • Poor plant maintenance
  • A lack of skilled operators
  • Poorly trained management
  • Reduction in safety management
  • Lack of safety guidelines
  • Safety alarms did not work
  • There was only one manual back up system (compared to four in US)
  • Fare towers and scrubbers were not working
  • Refrigeration system was turned off and the water cooling system did not have enough pressure

After the disaster the CEO of Union Carbide (Warren Anderson) was arrested by Indian officials. However, he fled the country while on bail and has never returned. In 1989 Union Carbide paid the Indian government a settlement of $470 million, despite the Indian government claiming more than $3.3 billion. In June 2010 seven ex-employees were convicted of negligence and sentenced to two years imprisonment and fined $2,000 (the maximum permitted punishment). Union Carbide is now owned by Dow Chemicals who deny responsibility for the accident because it happened before they purchased Union Carbide. The site around the factory is still polluted with chemicals, although it is disputed whether the ongoing pollution can be blamed on the leak.
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Bhopal Marks 25 Years Since Gas Leak Devastation - BBC article

Bhopal Trial: Eight Convicted Over India Gas Disaster - BBC article

Bhopal: India Wants Compensation Doubled - BBC article

1984 - Hundreds Die in Bhopal Chemical Accident - BBC article

Indian anger at Dow Olympics sponsorship - BBC article




Teeside (TS2)

Teeside is located in the NE of England and has traditionally been one of the heartlands of UK industry because of its availability of raw materials and labour and its proximity to the coast. One postcode in Teeside (TS2) has 17 major polluting factories producing chemicals and metals. One residential area Grangetown has an estimated 70 tonnes of pollutants fall on it annually. The pollutants mean that life expectancy in the area is 10 times lower than the national average and asthma and bronchitis rates are three times the national average.

Although the UK is a wealthier MEDC with a good standard of living, TS2 is still a poor area. The average income in the area is about 64% below the national average. This area highlights the fact that even in richer countries it is the poor that are often most disadvantaged by negative externalities. This is because that the poor can only afford the cheapest accommodation which is often found next to marginal or polluted land.

Minimata, Japan


Minimata is a Japanese town on the island of Kyushu. Minimata is a coastal town and is a traditional fishing town. During the 1940's many of the town's residents started to suffer from physical and neurological disorders. At first the cause of the illnesses were unknown. However, after much investigation it was discovered that residents were receiving mercury poisoning from eating infected fish - the Japanese have a lot of fish in their diet, some of it raw. The fish were being contaminated by a factory upstream. The poisoning killed over 100 people and the illness became known as 'Minimata Disease'. Although this is not a contemporary case study it will be mentioned again below in a contemporary context.

Japan Remembers Mercury Victims - BBC article

BP Oil Spill - Gulf of Mexico


The largest accidental oil spill in history started on 20th April 2010. The leak started with the explosion of the Deepwater Horizon oil rig. The initial explosion killed 11 people. The leak was finally stopped on 15th July 2010. However, in the three months that oil was leaking, it was estimated that 4.9 million barrels of oil escaped into the Gulf of Mexico. On the 19th September a relief well was finally completed which permanently stopped any future leaks. Attempts were made to disperse and break up much of the oil at sea, but a lot still reached the southern US states of Louisiana, Mississippi, Alabama and Florida. Tourism, wildlife and fishing were all seriously affected. BP (British Petroleum) which owned the drilling rights agreed to pay clean-up costs and set up a compensation fund of $20 billion. However, the legal case over responsibility is likely to go on for years because the oil rig that exploded was actually owned by Transocean Limited and some cement work on the well was been carried out by Halliburton Ltd. For further information Wikipedia has a very detailed page: http://en.wikipedia.org/wiki/Deepwater_Horizon_oil_spill

Oil rig blaze off Louisiana leaves at least 11 missing - BBC article
Gulf of Mexico Oil Leak Worst US Environment Disaster - BBC article
Experts Double Estimates of BP Oil spill size - BBC article
BP Oil Spill: The Environmental Impact One Year On - BBC article
Deepwater Horizon: Surviving the oil spill - interactive video - BBC article
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E-Waste


E-waste simply stands for electronic waste (televisions, microwaves, mobiles, computers, DVD players, refrigerators, games consoles, etc.). It is a growing problem in today's consumerist society where people buy and replace phone, laptops, games consoles on a regular basis. Population growth, economic development, affordability and improved networks also mean the problem is growing. E-waste is potentially hazardous because electronics contain over 60 elements, many of them harmful. Some of the most hazardous include mercury, lead, cadmium, sulphur and americium. The UN estimates that currently about 55 million tonnes of e-waste are being generated annually. It also said with rising standards of living, population growth and increases in people's disposable income in countries like China, India and Brazil was going to cause the problem to grow massively. Some estimates say that e-waste in India could grow by 500% between 2007 and 2020 and by 400% in China between the same dates. Developing countries are not only creating more of their own e-waste, they are also receiving e-waste from developed countries who do not want to dispose of it themselves.

Guiyu in China has become one of the biggest dumping grounds in the world. E-waste actually has an economic value because some of the elements within electronics and the electronics themselves, can be recycled and reused (copper and aluminum when extracted are valuable resources). Also batteries, circuit boards, etc. can be reused. However, many of the elements are not extracted safely. Acid is often used to remove metals from circuit boards. The harmful chemical released can cause water pollution and release carcinogens into the atmosphere.

The Basel Convention signed in 1989 and coming into force in 1992 is meant to control the transfer of hazardous waste between countries, but the US did not ratify this treaty. A lot of the e-waste is able to leave Europe because it is purposefully labelled incorrectly. The goods may not be labelled e-waste, or may be labelled for reuse rather than disposal. It is estimated that in the port of Rotterdam, Europe's busiest, only 3% of containers are checked before departing. Most waste from Europe goes to West Africa (Ghana and Nigeria) and South Asia (India and Pakistan) - see map below.

Further to the Basel Convention, Europe has created the Waste Electrical and Electronic Equipment Directive (WEEE). WEEE which came into force in 2003 sets targets for the collection, recycling and disposal of e-waste. The directive puts the emphasis for the collection and disposal of waste on the manufacturers and distributors of electronic products. However, even with this latest directive, monitoring all e-waste is still problematic with Europe estimating that just one third of its e-waste is to treated in line with WEEE. Again the biggest problem is distinguishing between e-waste for reuse and e-waste for disposal.

The problem of e-waste could be reduced in the future through better environmental awareness, education, enforcement of existing directives, greater punishment, more responsibility placed on producers and even consumers.
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Mountains of e-waste threaten developing world - BBC article

UN Warning on e-waste mountain - BBC article

Europe Breaking Electronic Waste Export Ban - BBC article

Computer Dumping Polluting Asia - BBC article
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Mining


Mining is the extraction of raw materials from the ground. There are many different types of mining. The most common are:

Opencast or strip mining: Removal of raw materials from the surface of the earth.
Quarrying: Digging large holes in the earth in order to remove raw materials.
Mountaintop removal: As the name suggests removing a mountain that contains raw materials.
Drift mining: Mining horizontally into a hillside to access seems of resources.
Shaft mining: Drilling vertical shafts in the ground to access underground seems.
Dredging: Extracting raw materials from lake and river beds e.g. gold and diamonds

Th extraction of raw materials has been going on since the birth of humans - during the stone age rock was extracted and used for weapons and tools. However, with the growth of the world's population and the subsequent growing demand for raw materials, mining is now taking place on a much larger scale and in more inhospitable and environmentally sensitive locations.

A lot of mining is very inefficient has serious environmental impacts. For example for every tonne of copper that is produced, close to one hundred tonnes of waste material are produced. Not all mining is properly regulated, in the Amazon an estimated 100 tonnes of mercury has been added to rivers in attempt to separate gold from other materials. Mercury destroys aquatic life and can get into the human food chain as well causing 'Minimata Disease'. Below is a summary of some of the problems caused by mining.
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Disadvantages of Surface Mining e.g. quarrying and opencast

Disadvantages of Sub-surface Mining e.g. drift and shaft mining

  • Destruction of the physical environment
  • Habitat destruction and deforestation
  • Visual pollution - quarries are not pretty to look at
  • Air pollution from dust
  • Air pollution from heavy equipment
  • Surface and ground water pollution from heavy metals
  • Noise pollution from explosions and equipment
  • Increased congestion on roads
  • The creation of slag heaps which can collapse e.g. Aberfan in Wales (Coal Tip Buries Children in Aberfan - BBC)
  • Land subsidence from the creation of tunnels
  • Creation of slag heaps. Removed material has to be stored somewhere
  • Air pollution from equipment
  • Increased cost of building shafts and tunnels
  • Increased dangers from explosions, leaks and collapses
  • Groundwater pollution
  • Increased congestion
  • Visual and noise pollution (sub-surface mines still have operations above ground)

Human Costs During Mining

Human Costs After mining

  • Air pollution can increase breathing ailments like asthma and bronchitis
  • Risk of underground accidents to miners e.g. San Esteban mine in Chile
  • Chemicals e.g. mercury used in some forms of mining can cause water pollution and illnesses
  • Noise pollution and visual pollution can disturb sleep and reduce value of property
  • Land is often privatised to make way for mines
  • Land can subside during mining which may damage property and roads
  • Vibrations from traffic, heavy equipment and explosions may damage buildings and disturb people
  • Subsidence of land can damage homes and certainly reduce property prices
  • Dangerous holes and lakes (steep sided) are often left which are potentially fatal
  • Shafts and tunnels can be left open and be potentially dangerous
  • Dangerous equipment and chemicals may be left after mining
  • Mines that have not been re-landscaped remain a source of visual pollution
  • Unemployment after raw materials run out
  • Damaged soil (pollution and degradation) which may be no longer good for farming
Mercury Poisoning Disease Re-emerges - BBC article

Chile Mine Collapse Traps 34 Miners - BBC article

Glencore linked to acid waterfall in DR Congo - BBC article

Sidoarjo Mudflow


Sidoarjo is on the island of Java in Indonesia, 20km south of Surabaya. Indonesia sits on a destructive plate boundary (the Indo-Australian plate is subducting under the Eurasian plate). As well as earthquakes and volcanoes being present at destructive plate boundaries, mud volcanoes are also common, especially in East Java.

East Java has also got large oil and gas reserves. In order to try and access these reserves PT Lapindo Brantas had started exploratory drilling. On the 28th May PT Lapindo Brantas drilled two boreholes. The second borehole was deeper reaching a depth of 2,834 metres. However, the drill used for this borehole did not have a protective casing which allowed water, steam and a small amount of gas to be released triggering an explosion. The first explosion was about 200 metres from the dill sites, further explosions on the 2nd and 3rd June happened 800-1000 metres from the drill site.

The explosions caused fractures to the surface and by 5th June locals noticed mud escaping. In the first three months the daily flow of mud was between 7,000 and 150,000 cubic metres. 240 hectares of rice paddies were lost, along with eight villages and 25 factories. In total 11,000 people were displaced. On the 23rd December ground subsidence caused a gas leak and explosion killing 11. 18 months after the initial explosions 20km2 of land had been lost, 11 towns buried, 16,000 displaced, the local railways line had been covered along with the Porong-Gempol toll road.

Dams and barriers were created to try and contain the flow, concrete balls were dropped into the fractures and mud pumped into the Porong River and Java Sea. Despite efforts to stop the flow, scientists have estimated that the flow could continue for up to 40 years.

The company involved initially blamed an earthquake for the accident. However, courts have already ordered the company to pay $400 million in clean up costs and compensation. The fear is that with clean-up costs like to exceed $1 billion, PT Lapindo Brantis will just declare bankruptcy.
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Drilling Blamed for Java Mud Leak - BBC article

Indonesian Mudflow to last 26 years - BBC article

Nuclear and Chemical Waste


Nuclear waste is one of the biggest disadvantages of using nuclear power. Even the most toxic waste equates to less than 0.5% of all waste, it is so toxic it will corrode containers it is stored in will kill anyone directly exposed. Underground bunkers and offshore sites have been suggested, but so far no long term safe solutions have been found to store nuclear waste. Nuclear waste is a long term problem because it has such a long half life.

The disposal of chemical waste also causes serious problems. One multinational headquartered in Amsterdam, Netherlands has just been found guilty of disposing of the waste illegally. Trafigura a metals and oil company leased ship to carry several hundred tonnes of toxic waste for disposal. The ship arrived in Amsterdam on 2nd Jule 2006. However, on discovering the shipment was more toxic than believed the disposal company raised its price by 20 times.

Trafigura refused to pay the increased costs so the ship set sail again. It was refused entry at every port until it reached Abidijan in the ivory Coast where a newly created company agreed to dispose the toxic waste. However, instead of disposing of it safely they dumped it. The resulting toxic pollution killed at least 10 and made a further 100,000 sick.

In 2007 Trafigura were forced to pay 152 million euros in compensation to the Ivory Coast. In 2009 it paid an additional $50 million to the people of the Ivory Coast. In 2010 it was also fined 1 million euros for transiting toxic waste through Amsterdam harbour.

For more information on the advantages and disadvantages of nuclear energy go to: Changing patterns of energy consumption)
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Nuclear waste storage options examined - BBC article

Nuclear waste storage problem must be addressed: EU - BBC article

Trafigura found guilty of exporting toxic waste - BBC article

Indonesia Presses UK to take back contaminated scrap - BBC article