Secondary resource curse's formation and transmission mechanism based on environmental externality theory

Abstract Due to developing countries' original intention of implementing circular development, secondary resource factories should have reduced environmental pollution. However, the reality of the situation has proved that the recycling of secondary resources may causes serious damage to the local environment. By comparing the similarities of primary resource exploitation and secondary resource recycling, this paper proposes the concept of the "secondary resource curse" based on environmental externality theory, which is compared with the "resource curse". The secondary resource curse's formation and transmission mechanisms are analyzed from the intraindustry, interindustry, and interregional perspectives. The essential pollution causes of the secondary resources industry in developing countries are found from these three aspects: (1) the enterprise's economic efficiency, the effects of different secondary resource recycling technologies on negative environmental externalities, and the reasons for "adverse selection of technology" in secondary resource factories are explained, which is shown that, in the case of regulatory loopholes, one-sided pursuit of economic profit may lead to the pollution problem of secondary resource enterprises; (2) the negativeexternalities of upstream stakeholders in the industrial chain implies that the manufacturers and consumers of products should be responsible for their clean recycling; and (3) the phenomenon of transregional resources recycling indicates that the environmental pressure in the inflow region is aggravated significantly when there is no extra compensation from outflow region for recycling and disposal of hazardous waste. Hence, we must adopt policy package for recycling secondary resources at different levels and minimize the negative externalities caused by resource recovery.