SPRING 2007 UMASS Amherst
Operations Research / Management Science Seminar Series

Date: Friday, March 16, 2007

Time: 11:00 AM
Location: Isenberg School of Management, Room 112

Speaker: Professor Karen R. Polenske

Department of Urban Studies and Planning
Massachusetts Institute of Technology
Cambridge, MA

Biography: Karen R. Polenske received the B.A. in 1959 from Oregon State College in home economics; the M.A. in 1961 from the Maxwell School, Syracuse University, in the joint program of public administration and economics; and the Ph.D. in 1966 from Harvard University in economics. She taught and conducted research in the Department of Economics at Harvard University from 1966 to 1972 when she joined the MIT faculty.

In addition to teaching in the Department of Urban Studies and Planning (DUSP), she is head of the International Development Group and director of the multiregional planning research team in the department. For her regional research, she works in the United States and China. She is a member of the MIT Energy Research Council. She is past president of the International Input-Output Association (1995-2001). Professor Polenske does international consulting as a senior economist for the Asian Development Bank, the World Bank, and the United Nations Development Programme, and international and domestic consulting for numerous private consulting firms.

Her publications include eight books; two of the books were published in 2005 and 2006. She has also published numerous articles in key economic and planning journals.

TITLE: Coke and Steel: The Strategic Significance of Their Regional Development in China in the Global Supply Chain
Abstract: My purpose in this talk is to analyze regional economic development planning in China in relation to the coke sector in Shanxi and Liaoning Provinces.  Using 1998-2003 data from sample surveys of coke plants in Shanxi Province, I will examine the industrial energy efficiency and pollution and the global effects of Chinas enforcement of environmental regulations.  For coke, I focus on the cokemaking sector in the township and village enterprises (TVEs) in Shanxi Province where plants are trying to modernize to meet new environmental regulations.   In the first part of the talk, I hypothesize that there is a serious tradeoff between improved pollution controls on cokemaking and rural employment in the province.

In the second part of the talk, I hypothesize that enforcement of the regulations is restricting the supply of coke, which is affecting global markets for steel.  The coke restriction is compounded by the excessive current demand for steel in China and the increasing steel demand in other parts of the world.  With the Chinese economy growing at more than 9% per year, analysts expect the demand for steel to continue to increase as more Chinese purchase automobiles and other consumer durables made of steel.

I document the occurrence of rapid price increases in coking coal, coke, steel, ocean freight rates, and iron ore: all of which are reaching levels higher than in the past 70 years.   Such high prices (and resulting profits) are enticing many peasants and others to produce coke and steel, and they are causing a rapid income increase both in Shanxi and Liaoning Province.  Although coke and steel plant managers are introducing new technologies and new equipment, the plants equipped with these technologies and equipment are still polluting more than they could.  I will document some of the reasons why this is occurring. 
This series is organized by the UMASS Amherst INFORMS Student Chapter. Support for this series is provided by the Isenberg School of Management, the Department of Finance and Operations Management, INFORMS, and the John F. Smith Memorial Fund.

For questions, please contact the INFORMS Student Chapter Speaker Series Coordinator, Ms. Trisha Woolley, twoolley@som.umass.edu