INTRODUCTION

Regulating environmental pollution in industrializing middle income countries (IMICs) is more challenging than in either high income countries (HICs) or low income countries (LICs). With their limited industrialization and relatively minor industrial pollution problems, LICs generally require less regulation and regulatory capacity. HICs, for their part, often have high levels of regulatory capacity supported by widespread environmental awareness. In many HICs, years of combined social and state pressures have helped internalize the costs of pollution prevention into market prices.

In IMICs, significant industrial pollution problems are often accompanied by low levels of regulatory capacity and environmental awareness. As a national economy industrializes, economic interests greatly overwhelm environmental interests, undermining various forms of legal, political, and social action against polluting firms. A combination of weak enforcement and pervasive noncompliance tend to create a vicious circle that works against pollution mitigation and control. The prevalence of noncompliance creates a situation in which norm violation is the rule and the costs of pollution are not internalized into market prices.