Resource Endowment and International Linkages

Abstract

This chapter is a reminder that an environmental analysis cannot be concluded within a national boundary. Resources have to be imported where the domestic supply is not sufficient to meet the demand, and Japan is a typical example. In other words, we have a situation where the final demand such as consumption and investment in Japan triggers a series of interindustry transactions within the economy, which then turns to foreign suppliers for raw materials. International linkages of environmental impact through international trade has to be sought in this context. Another route of international linkage would be through direct foreign investment which sometimes helps to relocate resource-intensive industrial activities abroad. A typical case in Japan is the aluminum industry, which has moved all of its refining processes to areas where energy is less expensive. The third source is transborder flow of pollutants. Acid rain is a typical example. In Japan, acid rain caused by foreign polluters has been detected, although the situation is presumably much worse on the European continent and North America due to the geographical proximity of countries. Fourth is global warming. The emission of GHGs will have global consequences, and the scope is much wider than the one discussed above. Another aspect of this issue involves the tropical rain forests and other vegetation which absorb CO₂ and help prevent the greenhouse effect. Seen in this way, the global community benefits from the existence of tropical rain forests, whereas their distribution is probably inversely related to the current levels of income. This chapter only touches on the first issue, which is the international linkages of Japanese society and economy through trade flows.