Exporting Forest Loss? A Cross-National Analysis of the United States Export–Import Bank Financing in Low- and Middle-Income Nations

• Published date: 01 June 2020
• Author: Jamie M. Sommer,Michael Restivo,John M. Shandra
• DOI: 10.1177/1070496520908310
• Date: 01 June 2020
• Subject Matter: Articles

Article

Exporting Forest Loss?

A Cross-National

Analysis of the United

States Export–Import

Bank Financing in

Low- and Middle-

Income Nations

Michael Restivo

1

, John M. Shandra

2

,

and Jamie M. Sommer

3

Abstract

Dependency theory argues that due to unequal economic relationships, including

exports, multinational corporations, and loans from multilateral lending institutions,

high-income nations exploit the labor and resources of low- and middle-income

nations. We extend this line of reasoning to the United States Export–Import

Bank, as it has recently come under scrutiny for its lending in the forestr y sector

of low- and middle-income nations. Although this concern has been raised, we are

not aware of any cross-national research that empirically evaluates if their invest-

ments adversely impact forests. Therefore, we examine the impact of the United

States Export–Import Bank lending in the forestry sector on forest loss. Using a two-

stage instrumental variable regression model to account for possible donor selection

bias as well as ordinary least squares regression to analyze data for 78 low- and

middle-income nations, we find that export credit agency financing is related to

increased forest loss from 2001 to 2014. Our findings are consistent with

1

Department of Sociology, State University of New York at Geneseo

2

Department of Sociology, State University of New York at Stony Brook

3

Department of Sociology, University of South Florida

Corresponding Author:

Jamie M. Sommer, Department of Sociology, University of South Florida, Tampa, FL, United States.

Email: jamiesommer@usf.edu

Journal of Environment &

Development

2020, Vol. 29(2) 245–269

!The Author(s) 2020

Article reuse guidelines:

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DOI: 10.1177/1070496520908310

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dependency theory ideas that economic linkages with high-income nations increase

forest loss in low- and middle-income nations.

Keywords

United States Export–Import Bank, forest loss, cross-national, two-stage instrumental

variable regression, development

The United States established the Export–Import Bank to create and sustain

employment in the United States by f‌inancing and insuring the exports of goods

and services of U.S. companies to foreign buyers (United States Export–Import

Bank, 2016). It accomplishes this goal by investing in projects abroad via loans

and by providing risk insurance (Clapp & Dauvergne, 2005). While, in the past,

the United States Export–Import Bank has come under political pressure in

Congress from market fundamentalists that oppose government disruptions to

free trade, economic analyses have centered upon questions of the effectiveness

of the Export–Import Bank’s f‌inancing to boost the competitiveness of indus-

trial sectors (Hopewell, 2017).

However, a separate line of critique of the United States Export–Import Bank

centers on whether projects may be adversely impacting the natural environment

(Clapp & Dauvergne, 2005). We argue that this may be the case because for two

reasons. First, the United States Export–Import Bank lends, guarantees, and

insures forestry projects in low- and middle-income nations including logging,

pulp and paper manufacturing facilities, and saw mills (United States Export–

Import Bank, 2000). Second, the United States Export–Import Bank f‌inancing

often catalyzes additional investments from other sources, including commercial

banks, hedge funds, and other private equity f‌irms, which allows a company to

expand the size of a given project (Rich, 2013).

1

Although these concerns have been raised, we are not aware of any cross-

national research that empirically evaluates if their investments adversely impact

forests. This lack of research is surprising for a number of reasons. First a

considerable body of cross-national research drawing on dependency theory

examines if various economic linkages between high- and middle- and low-

income nations lead to increased forest loss. According to dependency theory,

high-income nations tend to exploit low- and middle-income nations due to their

place at the top of the global economic hierarchy through setting the terms of

trade and the value of different types of labor and resources in their favor.

Cross-national research following this line of reasoning has identif‌ied several

246 Journal of Environment & Development 29(2)