The Potemkin Village of Green Governance of An Export-Oriented Island Economy in East Asia

Driven by the transition pressures from downstream end-users, manufacturing waste management has emerged as an existential issue for corporations. Primarily, regulatory baselines must not be breached, as facing punitive fines or operational halts imposes catastrophic impacts on businesses. Moreover, the extent to which circular economy practices are integrated critically affects the enterprise, directly dictating waste disposal expenditures and the profit margins of resource recovery. However, within a certain export-oriented island economy in East Asia, a series of paradoxical dynamics generates severe operational strains for enterprises. While one would theoretically expect an export-reliant economy to cultivate a highly business-friendly environment, the reality is quite the opposite. Grassroots environmental organizations, emerging in tandem with the region's democratization, have weaponized the Environmental Impact Assessment framework and referendum mobilizations to establish themselves as a pivotal third-party force, profoundly dictating the political and economic trajectory of the economy. Employing an outcomes-based analytical lens, this research deconstructs the Potemkin Village model of public governance in this economy—a systemic façade collaboratively erected by executive authorities and legislative bodies under the intense pressure of grassroots environmental advocacy and electoral politics. This study concludes that the façade of superficial compliance—erected upon the foundations of electoral politics and draconian penalization—drastically escalates the transaction costs for commercial activities, ultimately undermining the sustainable economic development of the region. JEL classification numbers: D20, D70, P35.