Global-local interactions in agrochemical industry: Relating trade regulations in Brazil to environmental and spatial restructuring in China

Abstract

China and Brazil are the world's leading exporter and importer of agrochemicals respectively. We combine quantitative and qualitative methods to analyze global-local interactions in the spatial restructuring of China's agrochemical industry in relation to a 2006 agrochemical import-acceleration policy in Brazil. We synthesize global political ecology and evolutionary economic geography (EEG) research on environmental regulations, technological upgrading, and the spatial transformations of China's pollution-intensive industries, discussing arguments that the Pollution Haven Hypothesis (PHH) and Porter Hypothesis (PH) co-exist due to firm heterogeneity. While existing studies conceptualize heterogeneity in terms of firm size, regional hub (cluster) effect, and local government intervention, this study adds global-local interactions as dimension of firm heterogeneity – distinguishing firms with weak and strong international linkages. We show the import-acceleration policy in Brazil contributed to the de-concentration of agrochemical production towards western China (confirming the PHH). Yet increasingly strict environmental regulations in China curtailed de-concentration after 2010, when well-established firms and new entrants with strong international linkages consolidated exports to Brazil, while new firms with weaker international linkages exited this market (confirming the PH). This co-existence of PHH and PH due to firm-level heterogeneity of global-local interactions illustrates a theoretical synthesis we call an evolutionary political economic geography (EPEG).